Limited Company Tax Calculator 2026/27: Director Take-Home Pay

Work out your director take-home pay

Enter your company's profit before tax, the salary you draw and the dividends you plan to take, then read the breakdown the calculator above produces. It follows the money in the order HMRC does: corporation tax at the company first, then income tax and National Insurance on what you pay yourself.

How a limited company is taxed in 2026/27

A limited company is a separate legal person, so its money is not automatically yours. That single fact explains almost everything about how a limited company tax calculator works. Profit is taxed twice over two stages, and the trick to keeping the bill sensible is understanding both.

Stage one happens inside the company. Your company pays corporation tax on its taxable profit (turnover minus allowable costs, including your own salary, which is a deductible business expense). The corporation tax rate depends on the level of profit and is set by HMRC each year, so for the exact percentage and the marginal relief band use our dedicated corporation tax calculator. Whatever is left after corporation tax is the company's distributable reserves.

Stage two happens when you move that money to yourself. You have two main routes:

• Salary paid through PAYE. It reduces company profit (so it cuts the corporation tax bill) but is subject to income tax and employee National Insurance on you, plus employer National Insurance on the company.
• Dividends paid from post-corporation-tax profit. Dividends carry no National Insurance, which is why most directors take a small salary and the rest as dividends. They are taxed at lower headline rates than salary, but they come out of money the company has already paid corporation tax on.

So the full formula a limited company tax calculator runs is:

Director take-home = Salary − income tax − employee NI + Dividends − dividend tax, where the dividends are only payable from Profit − salary − corporation tax.

Get the order wrong and you double-count. The salary is removed before corporation tax; the dividend tax is charged after corporation tax. The calculator keeps the two stages separate so the numbers reconcile.

The popular low-salary, high-dividend structure

A common approach for a single-director company is a salary pitched at the point where no income tax and no employee National Insurance are due, then dividends on top. For 2026/27 the Personal Allowance is £12,570 and the National Insurance Primary Threshold is also £12,570, so a salary at that level is the natural marker: it uses your tax-free allowance, counts as a company expense, and triggers no personal income tax or employee NI on the salary itself. Whether it is optimal for your company also depends on employer NI and corporation tax relief, which is exactly the trade-off our salary vs dividend calculator is built to optimise.

Dividend tax rates for 2026/27

Dividends sit on top of your other income and have their own rates, which rose for 2026/27. Everyone gets a £500 dividend allowance taxed at 0%. Above that, the rate depends on which income tax band the dividend falls into once it is stacked on top of your salary:

The ordinary and upper rates each went up by two percentage points for 2026/27. To see the dividend portion of your bill on its own, use the dividend tax calculator. Source for the rates and allowance: gov.uk – Tax on dividends.

2026/27 income tax bands that govern your dividends

Dividends are taxed using the same band limits as the rest of your income, so it helps to see them in one place. These are the figures the calculator uses for England, Wales and Northern Ireland:

Official thresholds: gov.uk – Income Tax rates and Personal Allowances. The corporation tax rate your company pays is set separately at gov.uk – Corporation Tax.

Worked example: a contractor with £60,000 of company profit

Meet Priya, the sole director of a one-person consultancy. After her costs, her company has £60,000 of profit, and she takes a salary of £12,570 plus £40,000 in dividends across the year. Here is the full journey her limited company tax calculator walks through.

Step 1 – Salary at company level. The £12,570 salary is a deductible expense, so it comes off profit before corporation tax. Personally, the salary equals the Personal Allowance and sits right on the NI Primary Threshold, so the income tax and employee NI on the salary are both £0.

Step 2 – Corporation tax. Taxable profit after the salary is £60,000 − £12,570 = £47,430. Corporation tax is charged on that figure at the prevailing 2026/27 rate (run the exact amount through our corporation tax calculator). Whatever remains after that bill is the pot Priya can pay herself as dividends.

Step 3 – Dividend tax. Priya draws £40,000 in dividends. Her salary has already used the whole Personal Allowance, so all £37,700 of her basic-rate band is available for the dividends. The maths:

• Dividend allowance: first £500 at 0% = £0
• Next £37,700 at the ordinary rate of 10.75% = £4,052.75
• Remaining £1,800 (the slice above the basic band) at the upper rate of 35.75% = £643.50

Total dividend tax = £4,052.75 + £643.50 = £4,696.25. Her total income of £52,570 nudges £1,800 into the higher-rate band, which is why a small part of the dividend is taxed at 35.75%.

Step 4 – Personal take-home. Salary £12,570 + dividends £40,000 = £52,570 drawn, minus £4,696.25 dividend tax = £47,873.75 in Priya's pocket. The corporation tax has already been settled at the company before the dividends were released, so there is no double-counting.

A lower-profit example

If Priya's company had only £30,000 of profit and she took the same £12,570 salary plus, say, £15,000 of dividends, the dividend maths is gentler: £500 at 0% and £14,500 at 10.75% = £1,558.75, because the whole dividend stays inside the basic-rate band. Smaller draws keep you below the £50,270 higher-rate threshold and away from the 35.75% rate entirely.

How the calculator works step by step

Behind the result, the tool does what an accountant would do on paper:

• Takes your salary off company profit to find taxable profit.
• Applies corporation tax to that taxable profit to find distributable profit.
• Caps your dividends at the distributable profit (you cannot legally pay dividends you do not have).
• Stacks salary then dividends to work out which income tax bands apply.
• Charges income tax and employee NI on the salary, then dividend tax on the dividends above the £500 allowance.
• Adds it together to show your net take-home and the total tax paid across both stages.

It is an estimate, not a substitute for proper accounts. It assumes a single director with no other income, no benefits in kind and no pension contributions, which keeps the picture clear.

How to keep your limited company tax bill efficient

A few levers genuinely move the needle for most small Ltd companies:

• Pay a company pension contribution. Employer pension contributions are usually an allowable expense, so they reduce taxable profit and never touch your dividend allowance. Check the annual allowance applies to your situation before going large.
• Use both spouses' allowances where genuine. If your partner is a real shareholder and director, splitting dividends can use two sets of £500 allowances and basic-rate bands. It must reflect genuine ownership, not a paper arrangement.
• Time dividends across tax years. A dividend declared on 6 April rather than 5 April falls into the next year's allowances and bands, which can keep you under the £50,270 higher-rate threshold.
• Claim every legitimate expense. Each pound of allowable cost reduces profit before corporation tax. Mileage, use of home, professional fees and software all count if they are wholly for the business.

If you are weighing up trading through a company at all versus staying a sole trader, compare the two routes with our self-employed tax calculator before you incorporate.

Common mistakes directors make

The errors below cost real money and crop up every January at self assessment time:

• Paying dividends the company cannot afford. Dividends can only come from retained profit after corporation tax. Pay more than that and HMRC can treat the excess as a director's loan, with its own tax charge.
• Forgetting dividends still need a personal tax return. Dividend tax is paid by you, not the company. You report it on a self assessment (SA100) and pay by 31 January. The cash in your account is not the cash you keep.
• Ignoring the £100,000 Personal Allowance taper. Once your total income passes £100,000, your Personal Allowance shrinks by £1 for every £2 over, which quietly pushes more dividends into higher rates. High drawings hit this trap.
• Assuming dividends avoid the higher-rate band. They do not. As Priya's example shows, dividends stacked on salary can cross £50,270 and jump from 10.75% to 35.75%.
• Overlooking employer National Insurance on salary. The company pays employer NI on wages above the secondary threshold, which is part of why the salary is usually kept low. A salary vs dividend comparison handles this for you.
• Treating company money as personal money mid-year. Taking cash before declaring a proper dividend can create a director's loan account problem. Declare and document dividends correctly.

Does region change your limited company tax?

Corporation tax and dividend tax are UK-wide, so a director in Glasgow and one in Cardiff pay the same corporation tax rate and the same dividend rates. The wrinkle is your salary: if you are a Scottish taxpayer, the salary portion is taxed using Scotland's income tax bands rather than the rest-of-UK bands. Because most directors keep salary at or near the £12,570 Personal Allowance, the Scottish difference is often small in practice, but it matters if you draw a larger wage. Dividends always use the UK-wide rates regardless of where you live.

If you are a contractor working inside or outside IR35, that status changes how much of your contract income can be taken as dividends at all, so it is worth checking with our contractor calculator alongside this tool.

These figures are estimates for guidance only and are not personal tax or financial advice. Confirm your position with HMRC or a qualified accountant before acting.

Who should use this calculator

This looks at a limited company’s total tax position — Corporation Tax on profit, then the personal tax a director pays on the salary and dividends drawn out. It is the whole-picture view, where the corporation tax calculator stops at the company level.

Two things drive the outcome. The director’s salary is usually set around the National Insurance thresholds — enough to preserve a State Pension qualifying year, low enough to limit NI — and the balance taken as dividends. And profit left in the company is taxed only at Corporation Tax rates, which is the main planning lever available.

What this calculator assumes

• Corporation Tax at 19% below £50,000 and 25% above £250,000, with marginal relief between.
• The director’s salary is an allowable expense, reducing taxable profit.
• Dividends are paid from post-tax profit and taxed at 10.75%, 35.75% or 39.35% after the £500 allowance.
• Dividends carry no National Insurance.
• All available profit is assumed withdrawn in the same year.

Limitations — what it does not cover

• Employer National Insurance on a salary above the secondary threshold, and the Employment Allowance where it applies.
• Employer pension contributions, an allowable expense and often the most efficient extraction route of all.
• Retaining profit, which defers personal tax entirely and changes the comparison.
• Capital allowances and R&D relief.
• IR35, if the company serves a single client.
• Directors’ loans and the s455 charge on overdrawn accounts.

Related calculators

Carry on building the full picture with our corporation tax calculator for the company-level bill, the salary vs dividend calculator to optimise the split, and the dividend tax calculator to isolate the personal dividend charge.

Innovative companies can reduce their corporation tax by claiming R&D tax credits on qualifying research and development.

Related guides

Employing staff? The Employment Allowance takes up to £10,500 off employer NI in 2026/27.