Salary vs Dividend Calculator

How to use it

• Enter the salary you already take. The starting figure is £12,570, the point at which employee National Insurance begins (2026/27). If you take no salary, enter 0.
• Enter the extra amount you want to draw from the company.
• Add any other income before tax (rent, pension, self-employment) and any dividends you already take this year, from this company or any other. Both sit in the tax bands before this draw does, so leaving them out makes the answer look better than it is. Leave them blank if there are none.
• Choose the band your company's profit falls in. That sets the corporation tax rate, and it changes which route wins, so the company comparison is not shown until you choose.
• The result shows what you keep from the same amount drawn, and what you keep from the same amount of company profit.

Dividend rates rose in April 2026

From 6 April 2026 the dividend ordinary rate went from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. The additional rate stayed at 39.35%. The dividend allowance remains £500.

Any comparison worked out on the rates in force before 6 April 2026 understates the dividend tax. A figure carried over from 2025/26 therefore shows the dividend route in a better light than the current rates support. The figures on this page are the 2026/27 rates, checked on the date shown above.

Why dividends usually still win in your pocket

Dividends carry no National Insurance. Salary carries employee National Insurance at 8% up to £50,270 and 2% above it (2026/27), on top of income tax. That gap is what makes the dividend route look better on the personal side.

Those figures compare the same amount drawn. They are not the same amount of company money, which is the comparison in the next section.

Above £100,000 the allowance taper adds to both routes

The personal allowance falls by £1 for every £2 of income over £100,000 (2026/27). Extra salary and a dividend both count towards that income. So a draw that takes you over the line does two things: it is taxed itself, and it removes part of the allowance that was sheltering the income you already receive, which is then taxed at 40%.

Losing the whole £12,570 allowance at 40% is £5,028 of extra tax on income you were already receiving (2026/27). The result above breaks that out on both routes when it applies, because it falls on either of them.

The company side can reverse the answer

Salary is a deductible expense for corporation tax, and so is the employer National Insurance on it. A dividend is not deductible; it is paid out of profit that has already been taxed.

So £30,000 drawn as salary and £30,000 drawn as a dividend do not cost the company the same. The salary route uses £30,000 plus the employer National Insurance on it, and the company deducts the lot. To pay a £30,000 dividend the company first pays corporation tax on the profit behind it. The calculator takes the profit the salary route uses, runs it through corporation tax, and shows what the dividend route leaves you from the same money.

The rate matters. At 19% the dividend route generally still wins. At 25%, and at the 26.5% that Marginal Relief produces on profits between £50,000 and £250,000 (financial year to 31 March 2027), the salary route often wins once you are a higher-rate taxpayer, even though the dividend still looks better on the same amount drawn. That is why the calculator asks for the profit band rather than assuming one.

Things that change the answer

• Dividends can only come from distributable profits. If the company has not made enough profit after tax, a dividend is unlawful, whatever the tax position says.
• Salary builds your National Insurance record and your state pension entitlement, but only where your earnings reach the lower earnings limit, £6,708 a year or £129 a week (2026/27). A salary below that does not count towards the year. Dividends do not build the record at any level.
• Savings interest is not modelled. It carries its own personal savings allowance and starting rate, so a director with significant interest should treat the figures here as approximate.
• Associated companies divide the £50,000 and £250,000 corporation tax limits (financial year to 31 March 2027). Three other associated companies divide them by four, so the main rate starts at £62,500 of profit.
• Mortgage lenders often treat salary and dividends differently when assessing affordability.
• Pension contributions made by the company carry no National Insurance, and are an allowable expense for corporation tax unless there is a non-trade purpose for the payment. They often beat both routes for money you do not need now.

Common questions