Salary vs Dividend Calculator
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Compare different salary and dividend mixes to find the most tax-efficient extraction strategy for UK limited company directors.
The TaxKiln Extraction Curve models the salary-vs-dividend trade-off across income bands rather than treating it as a single threshold decision.
Estimates only – not tax advice. For planning purposes only; does not replace professional advice or official HMRC calculations. Full disclaimer
TaxKiln framework
Salary-Dividend Extraction Curve
TaxKiln's optimisation analysis for Ltd Co director remuneration — modelling salary-vs-dividend mix against employer NI + employee NI + corporation tax + dividend tax thresholds per income band for the current tax year.
Scenarios
Profit after all costs except director salary/NIC
Director's annual gross salary from this company
Use 19% for profits under £50k, 25% for £250k+
Add 13.8% employer NIC cost on salary
Scenario Comparison
Compare tax burden and take-home pay across scenarios
| Scenario | Salary | Dividends | Employer NIC | Corporation Tax | Personal Tax | Combined Tax | Net Take-Home | Effective Rate |
|---|---|---|---|---|---|---|---|---|
Scenario 1 Best | £12,570.00 | £54,618.30 | - | £12,811.70 | £8,839.93 | £21,651.63 | £58,348.37 | 27.1% |
Income Split by Scenario
- Salary
- Dividends
Tax Burden Comparison
- Corp Tax
- Personal Tax
Net Take-Home Comparison
Detailed Tax Breakdown
Expand each scenario to see line-by-line calculations
Assumptions used in this calculation (click to expand)
What this calculator assumes
- UK-resident director of a single limited company; only salary + dividends from that company.
- Not caught by IR35 / off-payroll rules.
- No student loan repayments unless explicitly toggled.
- Employer's NIC is paid by the company; Employment Allowance NOT assumed (single director).
- Company pays Corporation Tax at the rate appropriate to its profit slice before declaring dividends.
Not included in this calculation
- Employment Allowance (£5,000) — not available to single-director companies.
- Pension contributions as part of the extraction mix.
- Benefits-in-kind, company cars or other taxable benefits.
- Scottish income tax bands (calculator uses rUK rates).
- Multiple-shareholder mixes or alphabet share structures.
Statutory basis
ITEPA 2003 (employment income)ITTOIA 2005 Pt 4 Ch 3 (dividend income)SSCBA 1992 (NIC)CTA 2010 s.18A and marginal relief (CT on retained profit)
How this is calculated (click to show the formula)
Total tax cost of extraction
Total cost = Income Tax (PAYE on salary, dividend rates on dividends) + Employee NIC + Employer NIC + Corporation Tax on retained profit funding dividends
The TaxKiln Extraction Curve compares total combined-tax cost across the income band — not just the headline rate at a single threshold.
Disclaimer: This tool provides estimates based on your inputs and current UK tax rules for the 2024/25 tax year. It is designed for planning purposes only and does not constitute tax advice.
Results assume rest-of-UK income tax rates (England, Wales, Northern Ireland) and that the director is UK-resident with no other income sources unless specified. Corporation Tax marginal relief is not calculated automatically.
This calculator does not replace bespoke professional advice or your own Corporation Tax computations. Always verify calculations with a qualified accountant before making decisions.