Salary, Dividends and Corporation Tax
A low salary near the NI threshold plus dividends is the classic UK director split — until bands move.
A UK limited-company director typically takes a salary around the National Insurance threshold and the rest as dividends. Bands move. Model the year you are in, not the year you remember.
Salary
Deductible for corporation tax. Creates NI and income tax above the personal allowance. A salary of £12,570 preserves the allowance without employee NI in the current setup.
Corporation tax
Charged on profit after salary. Small-profits rate 19%, main rate 25%, with marginal relief between.
Dividends
Paid from post-CT profit. £500 allowance, then 8.75% / 33.75% / 39.35%. Not a NI-able earning.
The trap
A large salary can look ‘simple’ and destroy take-home. A tiny salary can lose state-pension credits. The splitter is for the middle path.
This is not advice. Confirm thresholds with HMRC for the year you file. The engine uses 2026/27 bands.