Salary vs dividend calculator 2026
For most owner-managed companies in 2026/27, the salary that minimises NI while still earning a qualifying year for state pension is around £12,570. Above that, the choice between further salary and dividends depends on corporation-tax rate, marginal income-tax band and whether the Employment Allowance is available612.
The 2026/27 picture
Dividend rates rose by 2 percentage points on 6 April 20266. That narrows the dividend advantage, but salary still pays employer NI of 15% above the £5,000 secondary threshold and employee NI of 8%/2%, and corporation tax of 19% (small profits) or 25% (main) on profits12.
Typical splits at £40,000 director income
| Strategy | Salary | Dividend | Take-home |
|---|---|---|---|
| All salary | £40,000 | £0 | £31,000 (approx) |
| Low salary + dividends | £12,570 | £27,430 | £34,100 (approx) |
The dividend-favoured strategy still wins, but by less than under the 2025/26 rates. Pension contributions are usually a better next step than further dividends above the basic-rate band.