Figures: 2026/27 tax year. Reviewed by Noman Abbasi, ACCA.
If you run your own limited company, how you pay yourself matters. A small salary plus dividends is usually more tax-efficient than a large salary, but the best split depends on your profit, your other income and, the bit most free tools get wrong, how Corporation Tax marginal relief bites between £50,000 and £250,000 of profit. Enter your company profit and this optimiser finds the salary and dividend split that leaves you with the most after all taxes.
Why a salary-plus-dividends split is efficient
A director's salary is a deductible expense for the company, so it reduces Corporation Tax. Salary up to the personal allowance carries no income tax, and up to the National Insurance thresholds carries no employee NIC. Dividends, paid from post-Corporation-Tax profit, carry no National Insurance at all and are taxed at lower rates than salary. So a modest salary to use your allowances, topped up with dividends, usually beats taking everything one way.
The Corporation Tax marginal relief catch
Between £50,000 and £250,000 of profit, Corporation Tax is charged at an effective rate that rises from 19% towards 25%, the marginal-relief band. Getting this right changes the optimal split, because every pound of salary you pay reduces the company's profit and therefore the Corporation Tax at that marginal rate. Our calculator applies the marginal-relief formula properly, so the recommended split reflects your real Corporation Tax position, not a flat-rate approximation.
What the optimiser does
It tests a range of salary levels against the full stack of taxes, employer's National Insurance, Corporation Tax (with marginal relief), income tax and employee National Insurance on the salary, and dividend tax on what's left, and returns the salary that maximises your take-home, with the dividends and the tax breakdown alongside.
How is this different from your other calculators?
This tool finds the best split from a profit figure. If you already know your dividend figure and just want the tax on it, use the dividend tax calculator. If you want the take-home on a fixed salary, use the salary after tax calculator. This optimiser is the planning tool that sits above both.
A note for Scottish taxpayers
Scottish income tax bands are different, which affects the salary side of the calculation, though dividend tax rates are the same across the UK. This version uses the England, Wales and Northern Ireland bands; if you are a Scottish taxpayer, treat the salary figure as indicative and speak to us for an exact split. Every director's situation is different, so use this as a strong starting point and get it confirmed before you set your pay.
Frequently asked questions
What is the most tax-efficient salary and dividend split for 2026/27?
For most single-director companies, a small salary that uses your personal allowance and National Insurance thresholds, topped up with dividends from post-Corporation-Tax profit, is the most efficient. The exact optimal salary depends on your profit, your other income and Corporation Tax marginal relief. This calculator tests the options and returns the split that leaves you with the most after all taxes.
Why does Corporation Tax marginal relief matter for my salary?
Between £50,000 and £250,000 of profit, Corporation Tax runs at an effective rate rising from 19% towards 25%. Because a salary is deductible, each pound of salary you pay saves Corporation Tax at that marginal rate, which changes the optimal split. Tools that assume a flat 19% or 25% get the recommendation wrong; this one applies the marginal-relief formula.
Should I take a salary at all, or just dividends?
Usually a small salary is better than none, because it is deductible for Corporation Tax and can be free of income tax and employee National Insurance up to the thresholds. Taking everything as dividends forgoes that Corporation Tax saving. The calculator shows how much the optimal salary is worth versus taking all dividends.
Does this work for Scottish taxpayers?
The dividend side is the same across the UK, but Scottish income tax bands differ, which affects the salary side. This version uses England, Wales and Northern Ireland bands, so a Scottish taxpayer should treat the salary figure as indicative and confirm the exact split with an accountant.