Founder Dividend vs Salary Calculator 2026/27
Enter what you want to extract and your company profit. The tool computes the combined tax (Corporation Tax plus personal tax) for both the salary+dividend route and an all-salary route, with the Employment Allowance solo-director exclusion applied correctly. Outputs are a general illustration for 2026/27, not personal tax advice.
Founder Dividend vs Salary Calculator 2026/27
Enter what you want to extract and your company profit. The tool computes the combined tax (Corporation Tax plus personal tax) for both the salary+dividend route and an all-salary route, with the Employment Allowance solo-director exclusion applied correctly. Outputs are a general illustration for 2026/27, not personal tax advice.
Total amount you want to take from the company (salary + dividends combined).
Accounting profit before any salary or dividends are paid. Used to compute CT and available dividend pool.
Income from other sources (excluding this extraction). Places dividends and salary in the correct tax bands.
Solo-director Employment Allowance trap: the £1,135.5 employer NIC shown is a real cash cost that the £10,500 Employment Allowance does NOT cover for a sole-director company. A company with at least one non-director employee above the secondary threshold would qualify for EA and pay no employer NIC up to £10,500. This is a general illustration for 2026/27 based on the figures you entered, not personal tax advice. Your optimal split depends on your other income, your company's profit, whether you are the sole director, and your longer-term exit plans. Speak to us to set it up correctly.
Check your position with a startup tax specialist
A calculator gives you the shape of the answer. We confirm your exact figures, the reliefs you can claim, and what your business needs to file. No obligation, and we reply within one working day.
How the salary vs dividend calculation works
Founder-directors of UK limited companies typically pay a low salary (at or around the personal allowance) and draw the balance as dividends. The salary is deductible for Corporation Tax; dividends are paid from post-CT profit and are not deductible. Getting this asymmetry right is the core of the maths.
For 2026/27, CT is 19% on profits up to £50,000, rising to 25% above £250,000 with marginal relief between. Dividend tax rates are 10.75% (basic), 35.75% (upper) and 39.35% (additional), with a £500 allowance (FA 2026 s.4). Employer NIC is 15% above a £5,000 secondary threshold.
The critical wedge for founders: a company whose only employee paid above the secondary threshold is a director cannot claim the Employment Allowance. That means employer NIC on even a modest director salary is a real cash cost, not an offset. The toggle above applies this rule correctly.
If you hold EMI options or are planning a BADR exit (18% from April 2026), over-optimising current extraction can affect the exit. Use the EMI vs unapproved calculator to model the share-scheme interaction.
Pre-revenue or low-profit companies: if the company does not have distributable post-CT profit, dividends above that amount are not lawful. The tool caps dividends and flags the low-profit case. Filing losses now banks them against future profits.
Frequently asked questions
What is the best salary/dividend split for a founder in 2026/27?
The most tax-efficient split for a sole-director company is usually a salary at the personal allowance (£12,570) to avoid income tax and employee NIC on the salary itself, then dividends for the balance. However, that salary still triggers £1,050 employer NIC (£12,570 minus £5,000 = £7,570 at 15%) if you are the sole director, because the Employment Allowance does not apply. The right answer depends on your profit level, other income, and exit plans.
Can a single-director company claim the Employment Allowance?
No. If the only employee paid above the secondary NIC threshold is also the director, the company is excluded from the Employment Allowance. This is one of the most common gaps in generic optimiser tools.
What are the 2026/27 dividend tax rates?
10.75% (basic rate), 35.75% (upper rate) and 39.35% (additional rate), after a £500 dividend allowance. These are the FA 2026 rates in force from 6 April 2026.
What if my company has no profit yet?
If the company has no distributable post-CT profit, dividends above that amount are not lawful. The calculator caps them and flags the constraint. File the CT return to bank trading losses against future profits.
Do Scottish founders pay a different rate on salary?
Yes. Scottish income tax has different bands on the salary line. Toggle the Scotland flag above to see the warning. CT and dividend rates are UK-wide and unaffected.
How do EMI options affect my extraction plan?
EMI shares qualify for Business Asset Disposal Relief at 18% on gains up to a £1m lifetime limit. Over-optimising current salary or dividend extraction can affect your marginal rate at exit. See the EMI vs unapproved calculator for the share-scheme comparison.
Want to be sure of your position?
Tell us about your startup situation and we will confirm your exact figures and the compliance steps that apply to you. No obligation.