Owner-managed limited companies
Salary vs Dividend Calculator
Compare how much of a fixed company profit amount could reach you as extra salary or as a dividend after Corporation Tax, PAYE and National Insurance.
The comparison allows for an existing salary, other personal income, remaining Employment Allowance and associated companies. It is a planning estimate, not authority to declare a dividend.
Company extraction estimate
Compare extra salary with a dividend
Enter profit available before this proposed extraction. Existing salary and other income help place the extra amount in the correct personal tax bands.
- Gross extra salary
- £0.00
- Net extra salary
- £0.00
- Employer NI after allowance
- £0.00
- PAYE and employee NI
- £0.00
- Dividend available after Corporation Tax
- £0.00
- Net dividend after personal tax
- £0.00
- Corporation Tax on profit amount
- £0.00
- Incremental dividend tax
- £0.00
Commercial needs, pension plans, benefit entitlement and distributable reserves can matter more than the headline result.
Planning estimate for a Welsh taxpayer and a standard UK trading company. It excludes student loans, pensions, benefits, savings, capital gains and director-specific NI timing.
Direct answer
Is a dividend always more tax-efficient than salary?
No. A salary is normally deductible for Corporation Tax but may create PAYE and employer and employee National Insurance. A dividend is not deductible and can only be paid from distributable profits, but it does not attract National Insurance.
The answer can change with your existing income, remaining Employment Allowance, Corporation Tax band, associated companies and whether the payment supports pension or benefit objectives.
Read the dividend tax rules on GOV.UK →Calculation method
What the salary and dividend comparison calculates
The same starting company profit is used for both routes so the net amounts can be compared on a consistent basis.
Salary company cost
The calculator finds the gross salary that uses the available company amount after incremental employer NI and any remaining Employment Allowance.
Salary deductions
Incremental PAYE and employee NI are calculated after the existing salary and other income entered.
Dividend amount
Standard Corporation Tax is estimated first; the remaining profit is treated as the dividend available.
Dividend tax
The dividend is layered above existing income, with the personal and dividend allowances applied where available.
| Item | Rate |
|---|---|
| Personal allowance | £12,570 |
| Employee NI main / upper rate | 8% / 2% |
| Employer NI rate / secondary threshold | 15% / £5,000 |
| Dividend allowance | £500 |
| Dividend ordinary / upper / additional rates | 10.75% / 35.75% / 39.35% |
Official sources: PAYE and National Insurance rates, dividend tax and Corporation Tax rates.
Professional review points
Extraction planning is more than one tax calculation
A lawful dividend requires sufficient distributable reserves and the correct paperwork. A salary must be processed through payroll, and director National Insurance can differ from an ordinary annualised employee estimate.
Included here
- Welsh income-tax bands;
- employee and employer NI;
- Employment Allowance entered;
- standard Corporation Tax;
- personal dividend tax.
Check separately
- distributable reserves;
- pension contributions and benefits;
- student and postgraduate loans;
- multiple employments or directors;
- IR35 and settlements rules.
Common questions
Salary and dividend calculator questions
Why does the calculator ask for existing salary?
Extra salary and dividends sit above income already received. That existing income can use the personal allowance, tax bands and National Insurance thresholds before the proposed extraction.
Can a company pay a dividend if it has cash?
Cash alone is not enough. The company needs sufficient distributable profits, a proper decision and dividend documentation.
Does Employment Allowance always apply?
No. Eligibility restrictions include companies where the only employee above the secondary threshold is a director. Enter only an amount that the company can validly use against the extra employer NI.
Why can my payroll result differ?
Payroll uses pay-period calculations, tax codes and director NI methods. This calculator is an annual planning comparison and rounds only the displayed results.
Confidential enquiry
Need a director remuneration review?
Tell us the company year end, expected profit and current salary. Do not send authentication codes, bank details or a UTR.