Director Pay Planner.
Three questions, and you get the salary and dividend split that leaves you the most after tax, against the standard £12,570 split every accountant quotes.
For owner-directors of UK limited companies with roughly £30,000 to £300,000 of profit.
How director pay works in 2026/27
A company director chooses how to be paid, and the choice changes how much of the money arrives. Salary is a business expense, so it cuts the company’s corporation tax, but it carries income tax at 20%, 40% or 45%, employee National Insurance at 8% between £12,570 and £50,270, and employer National Insurance at 15% on everything above £5,000. Dividends carry no National Insurance at all and have their own lower rates of 10.75%, 35.75% and 39.35%, but they can only be paid out of profit the company has already paid corporation tax on, at 19% up to £50,000, 25% from £250,000 and an effective 26.5% in between.
Why £12,570 is the usual answer
A salary of £12,570 uses the personal allowance exactly. It attracts no income tax and no employee National Insurance, it still counts as a qualifying year for the state pension, and it gives the company a deductible expense. Everything above it comes out as dividends. For a sole director with nobody else on the payroll, that is almost always the right shape, because the company pays 15% employer National Insurance on every pound of salary above £5,000 and cannot claim the Employment Allowance to cover it.
When a bigger salary wins
The answer changes when the company has someone else on the payroll. The £10,500 Employment Allowance then covers the employer National Insurance on a salary of up to £75,000, and once profit passes £50,000 each pound of salary is deductible at 25% to 26.5% while costing 28% in income tax and National Insurance. A pound of dividends has already borne that corporation tax and then pays 10.75% on top. On those numbers salary is cheaper up to the top of the basic rate band, and the planner above shows the difference in pounds for your own profit and take-home.
What changed in April 2026
The November 2025 Budget raised the two main dividend tax rates by two percentage points from 6 April 2026, so the ordinary rate is now 10.75% and the upper rate 35.75%. The personal allowance, the £37,700 basic rate band and the National Insurance thresholds are unchanged. The rise makes the comparison between salary and dividends closer than it was, which is why the standard split deserves checking rather than assuming.
The planner models one director, one company with no associated companies and no other personal income, using England, Wales and Northern Ireland rates. Pensions, a spouse on the payroll, student loans and the child benefit charge all move the answer, and a short call covers them. For the longer read, see director salary versus dividends in 2026/27, or run the agency tax savings calculator for the wider picture.