Salary vs dividends 2026/27
rates verified 24 Jul 2026 · next refresh after Autumn Statement
Direct answer
For 2026/27 owner-managers, a low salary (typically £12,570) plus dividends still beats all-salary extraction at most profit levels. The 2pp dividend uplift on 6 April 2026 narrows the gap; pension contributions are usually the next-best move above the basic-rate band612.
Decision factors
- Employment Allowance – £5,000 a year against employer NI, but not for sole-director companies.
- Corporation tax – 19% small-profits rate to £50,000; 25% main rate above £250,000; marginal relief between.
- State pension qualifying year – £12,570 salary secures a qualifying year for NI.
- Mortgage affordability – lenders often weight salary higher than dividends.
- Pension – employer pension contributions are corporation-tax deductible and avoid both NI charges.