Salary vs Dividend Calculator 2024/25
Find the optimal salary and dividend split for UK company directors. Compare three scenarios — all salary, optimal mix, and all dividends — to see which puts the most money in your pocket.
Director Tax Optimisation
Enter your company and income details to compare scenarios
Profit before paying your salary or dividends
Total amount you want to draw from the company
Salary from another job, rental income, spouse income affecting your tax band
You can claim the Employment Allowance if you have other employees — not if you are the sole employee/director.
Important note
This calculator provides an estimate for planning purposes. Tax law is complex and individual circumstances vary. Always consult a qualified accountant or tax adviser before making decisions. Figures use 2024/25 rates.
Why most directors take a low salary plus dividends
Taking all income as salary means paying employee and employer National Insurance on top of income tax, with no corporation tax saving on the NI portion. Taking a low salary up to the NI threshold (or personal allowance if Employment Allowance is available) and extracting the rest as dividends typically saves thousands of pounds per year.
Key 2024/25 thresholds
- Personal allowance: £12,570 — income below this is tax-free
- Secondary (employer) NI threshold: £9,100 — employer NI at 13.8% applies above this
- Primary (employee) NI threshold: £12,570 — employee NI at 8% applies above this
- Dividend allowance: £500 — dividends below this are tax-free
- Basic rate band: £12,570–£50,270 — 20% income tax, 8.75% dividend tax
- Higher rate band: £50,271–£125,140 — 40% income tax, 33.75% dividend tax
Corporation tax on dividends vs salary
Salary is a deductible business expense; dividends are not. If the company pays 25% corporation tax (profits over £250,000) or 19% (profits under £50,000), paying salary reduces the CT bill. This calculator nets off the CT saving when calculating total tax for salary scenarios.