How much should I pay in dividends and salary?

I am the sole director employee of my limited company

Based on your profit and other income, this calculator provides a breakdown of all of the taxes you can expect to pay as well as a final take-home figure.

As a sole director you have two options:

Pay yourself £9,100. This is the secondary threshold, which means:

• You don’t have any tax obligations.

• You don’t have any national insurance obligations.

Pay yourself £12,570. This is the personal tax allowance, which means:

• You don’t have any tax obligations.

• You will have an employer national insurance liability of roughly £480.

• Note, this will be offset by increased corporation tax savings. The additional salary expense of £3,950 (£3,470+£480) from £9,100, will reduce corporation tax by £750 (£3,950 X 19%). This assumes that your company profits are £50,000 or under. If your annual profits are higher, then your CT savings will also increase.

If you are a payroll client of ours we will stay on top any obligations for you, so we would typically recommend paying yourself the higher amount.

I am a director of a company with more than 1 employee

Pay yourself  £12,570. If you have two directors or one or more additional employees you will be eligible for employment allowance. This means £12,570 will be the most efficient salary for you as your employer’s national insurance will be covered, which means:

• You don’t have any tax obligations.

• You don’t have any employee national insurance liability.

Will I still qualify for state pension and other benefits?

Yes, although you are not making National Insurance contributions, if you have a salary of more than the Lower Earnings Limit (LEL), which is £533/month, it will still count as if you are making contributions, so you will still receive the benefits associated with making them.

For a full description of how to navigate these changes, read our blog post on the most Tax Efficient Directors Salary 2023/2024.