Limited Company Tax Calculator — salary + dividends vs PAYE
For single directors of UK limited companies: choose how much to pay yourself and see your effective tax rate taking it as a £12,570 salary plus dividends, compared with taking the same amount entirely as salary — every tax line included, using 2026/27 rates.
Revenue minus business expenses, before your salary
Paid as £12,570 salary + £52,476 dividends in the company route, or all as salary via PAYE. Slide to the top to take out everything.
Paid by the company before corporation tax — no income tax or NI. The annual allowance is typically £60,000.
Using 2026/27 rates: dividend tax 10.75%/35.75%/39.35%, corporation tax 19–25% with marginal relief, employer NI 15% above £5,000 (no Employment Allowance for single-director companies).
Where the profit goes — salary + dividends
Where the profit goes — all salary (PAYE)
Tax band breakdowns
Corporation tax — on £66,295 of company profit
| Band | Rate | Profit in band | Tax |
|---|---|---|---|
| Small profits rate (first £50,000) | 19% | £50,000.00 | £9,500.00 |
| Marginal relief band (£50,000–£250,000) | 26.5% | £16,294.50 | £4,318.04 |
Income tax & dividends — on your salary + dividends
| Band | Rate | Income in band | Tax |
|---|---|---|---|
| Personal allowance (tax-free) | 0% | £12,570.00 | £0.00 |
| Dividend allowance | 0% | £500.00 | £0.00 |
| Basic rate — dividends | 10.75% | £37,200.00 | £3,999.00 |
| Higher rate — dividends | 35.75% | £14,776.46 | £5,282.58 |
Income tax if taken entirely as salary (PAYE) — £70,217 gross
| Band | Rate | Income in band | Tax |
|---|---|---|---|
| Personal allowance (tax-free) | 0% | £12,570.00 | £0.00 |
| Basic rate | 20% | £37,700.00 | £7,540.00 |
| Higher rate | 40% | £19,947.39 | £7,978.96 |
Side-by-side breakdown
| Line | Salary + dividends | All salary (PAYE) |
|---|---|---|
| Take-home pay | £55,764.88 | £51,283.48 |
| Salary / gross salary | £12,570.00 | £70,217.39 |
| Dividends taken | £52,476.46 | — |
| Employer NI | £1,135.50 | £9,782.61 |
| Corporation tax | £13,818.04 | — |
| Income tax | £0.00 | £15,518.96 |
| Employee NI | £0.00 | £3,414.95 |
| Dividend tax | £9,281.58 | — |
| Total tax | £24,235.12 | £28,716.52 |
| Effective tax rate | 30.3% | 35.9% |
All post-tax profit (£52,476) is paid out as dividends this year.
How the two routes are taxed
Salary + dividends:a £12,570 salary (the personal allowance) and the employer NI on it are deducted from profit before corporation tax. The remaining profit pays corporation tax at 19–25% (with marginal relief between £50,000 and £250,000), and the rest of your chosen payout comes out as dividends, taxed at 10.75% / 35.75% / 39.35% after the £500 dividend allowance. Anything you don't pay out stays in the company after corporation tax.
All salary (PAYE): the same payout is taken entirely as gross salary (capped at what the profit can fund once 15% employer NI is added on top), then you pay income tax and 8%/2% employee NI — the position of an inside-IR35 engagement or a regular employee whose employer has the same budget. Profit not used for salary pays corporation tax and stays in the company.
Worked example
On £80,000 of profit with a £12,570 salary: employer NI is £1,135.50, corporation tax £13,818.04, and dividends of £52,476 attract £9,282 of dividend tax — leaving £55,765 in your pocket (30.3% effective tax). The same profit taken entirely as salary leaves £51,283 (35.9%).
Rates last reviewed 12 June 2026 against HMRC and Autumn Budget 2025 figures. Estimates only — not tax advice; speak to an accountant about your situation.
Frequently asked questions
Is a limited company still worth it after the 2026 dividend tax rise?
Usually yes, but the gap has narrowed. From April 2026 dividend tax is 10.75% (basic) and 35.75% (higher). On £80,000 of profit with a £12,570 salary, the ltd route still keeps about £4,481 more per year than taking it all as salary — an effective rate of 30.3% versus 35.9%. Run your own numbers; the advantage shrinks as profit rises.
Why do single directors take a £12,570 salary?
£12,570 matches the personal allowance, so the salary itself is income-tax-free, and it sits below the employee NI threshold. It's above the £6,500 lower earnings limit, so the year still counts toward your State Pension. The salary and the employer NI on it are deductible expenses, saving corporation tax. The trade-off: 15% employer NI applies above £5,000, which this calculator includes.
How is corporation tax calculated between £50,000 and £250,000?
Profits up to £50,000 pay the 19% small profits rate and profits over £250,000 pay the 25% main rate. Between the two, marginal relief applies: tax = profit × 25% − (£250,000 − profit) × 3/200, which works out to an effective 26.5% on each pound of profit inside the band.
Why doesn't my company get the Employment Allowance?
Companies whose only employee paid above the £5,000 secondary threshold is also a director are excluded from the Employment Allowance. That's exactly the single-director case, so this calculator charges employer NI from the first pound above £5,000 of salary.
Why are employer pension contributions so tax-efficient?
An employer pension contribution paid by your company is deductible before corporation tax and attracts no employer NI, income tax, employee NI, or dividend tax — every pound of profit becomes a pound in your pension. It's usually the single most efficient way to extract value from a limited company, with the trade-off that the money is locked away until pension access age. The annual allowance is typically £60,000 (tapered for very high incomes).
What does this calculator leave out?
It assumes all post-tax profit is paid out as dividends in the same year, no other income, no IR35 complications, and England/Wales/NI tax bands. Employer pension contributions are applied identically in both routes. Retaining profit in the company, income splitting with a spouse, and pension carry-forward can change the picture — talk to an accountant before acting.