What's the most tax-efficient director's salary for 2026/27?

There's no single figure that suits everyone, because it depends on your company's profit level and your other income, but the general principle is to set a salary that uses your personal allowance and National Insurance thresholds efficiently — typically around the employer National Insurance secondary threshold of £5,000, so it counts towards your state pension record without triggering employer NI — and extract the remainder as dividends. This calculator works out the actual optimal figure for your numbers rather than applying a generic rule.

How much corporation tax will my company pay before I can take dividends?

For 2026/27, corporation tax is 19% on profits up to £50,000, rising through marginal relief to an effective rate of up to 26.5% on profits between £50,000 and £250,000, and settling at the main rate of 25% above £250,000. Whatever's left after corporation tax is what's available to extract as salary and dividends.

How does the 2026 dividend tax rise affect the salary/dividend split?

Because dividend rates rose by two percentage points from 6 April 2026 (basic rate to 10.75%, higher rate to 35.75%), dividends became slightly less favourable relative to salary at the margin, though the underlying advantage of avoiding employer and employee National Insurance on dividend income remains. This calculator re-runs the optimisation for the current rates rather than relying on a pre-2026 rule of thumb.

Is a limited company still more tax-efficient than being a sole trader?

For most contractors at typical rates, yes — the combination of corporation tax (19% to an effective 26.5%) followed by dividend tax (10.75%/35.75%/39.35% after the £500 allowance) usually beats income tax plus Class 4 National Insurance (6% and 2%) on the same profit as a sole trader, particularly once profit rises past the point where dividends stop needing to be fully distributed each year. This calculator lets you compare both structures on your actual numbers.

Does this calculator show my full take-home, not just the company's tax bill?

Yes — it takes you all the way from contract profit through corporation tax, to the suggested salary and dividend split, to your final personal take-home after income tax, employee National Insurance (on the salary portion) and dividend tax (on the dividend portion).

Limited Company Tax Calculator 2026/27 – Profit, CT & Dividend Split

Salary	Dividend	Net-in-pocket
£0	£77,250	£62,379
£5,000	£73,575	£65,018
£10,000	£69,900	£67,657
£15,000	£66,225	£69,615
£20,000	£62,550	£70,854
£25,000	£58,875	£72,093
£30,000	£55,200	£73,332
£35,000	£51,525	£74,571
£40,000	£47,850	£75,079
£45,000	£44,175	£75,400
£50,000	£40,500	£75,720
£55,000	£36,450	£75,043
£60,000	£32,400	£74,328
£65,000	£28,350	£73,614
£70,000	£24,300	£72,899
£75,000	£20,250	£72,184
£80,000	£16,200	£71,470
£85,000	£12,150	£70,755
£90,000	£8,100	£70,040
£95,000	£4,050	£69,326
£100,000	£0	£68,557

Salary

Dividend

Net-in-pocket

£0

£77,250

£62,379

£5,000

£73,575

£65,018

£10,000

£69,900

£67,657

£15,000

£66,225

£69,615

£20,000

£62,550

£70,854

£25,000

£58,875

£72,093

£30,000

£55,200

£73,332

£35,000

£51,525

£74,571

£40,000

£47,850

£75,079

£45,000

£44,175

£75,400

£50,000

£40,500

£75,720

£55,000

£36,450

£75,043

£60,000

£32,400

£74,328

£65,000

£28,350

£73,614

£70,000

£24,300

£72,899

£75,000

£20,250

£72,184

£80,000

£16,200

£71,470

£85,000

£12,150

£70,755

£90,000

£8,100

£70,040

£95,000

£4,050

£69,326

£100,000

£0

£68,557

Turning company profit into salary and dividends the tax-efficient way

For a contractor trading through a limited company, the journey from contract profit to money in your personal account runs through two separate tax systems: corporation tax on the company's profit, then income tax and dividend tax on however you extract what's left. Getting the salary/dividend split right for 2026/27 matters more than usual, because dividend tax rates rose by two percentage points from 6 April 2026 while corporation tax's small-profits rate and marginal relief band are unchanged — shifting the balance slightly back towards salary at the margin for some company profit levels.

This calculator runs the whole chain in one place rather than treating corporation tax and dividend tax as separate tools: enter your contract profit and expenses, see corporation tax applied at the company's marginal rate (19% up to £50,000 profit, rising through marginal relief to an effective 26.5% before settling at 25% above £250,000), then see an optimised director's salary and dividend split applied to what's left, using the £500 dividend allowance and the new 10.75%/35.75%/39.35% dividend rates.

From contract profit to take-home pay

Start with your company's profit for the year, after deducting allowable business expenses
Corporation tax is applied at the marginal rate for 2026/27, depending on profit level (19% up to £50,000, an effective rate up to 26.5% within the marginal-relief band, 25% above £250,000)
A director's salary is set at a level designed to use your personal allowance and National Insurance thresholds efficiently without triggering employer National Insurance unnecessarily
The remaining post-tax profit is extracted as dividends, taxed after the £500 allowance at 10.75%, 35.75% or 39.35% depending on which band your total income falls into
The calculator compares this optimised split against alternatives (higher salary, different dividend timing) to show whether the suggested split genuinely comes out ahead

Limited Company Profit, Tax and Dividend Calculator (2026/27)

Turning company profit into salary and dividends the tax-efficient way

From contract profit to take-home pay

Frequently asked questions