Calculator
Salary v Dividend
£744. That is what April’s two-point dividend rise added to the tax on the standard director’s draw — £12,570 salary, £37,700 dividends, the same money as last year. Set your profit and see both routes out, every tax counted.
Profit before any salary, employer NI or corporation tax — the pot your draw comes out of.
Standard route keeps
£55,765
£12,570 salary, the rest as dividends
All-salary keeps
£51,283
the whole profit through payroll
The dividend route is ahead by
£4,481
a year, at this profit
The same profit, both ways out
Standard: £12,570 + dividends
Total tax £24,235 — an effective 30.3% of the profit, once corporation tax, employer NI and dividend tax are all counted.
All of it as salary
Total tax £28,717 — an effective 35.9%, most of the extra being employee and employer National Insurance.
Of your next £100 of profit drawn as dividend, you keep £47 — the marginal rate the headline numbers hide, computed by re-running everything on both sides of the £100.
The route your accountant set up in 2019
Most owner-directors are on the same arrangement: salary to the personal allowance, the rest as dividends. It was the right answer when it was set up, and it is usually still better than payroll — the calculator above shows the gap at your profit. What it is not, any more, is cheap. Dividend rates rose two points in April 2026, to 10.75% and 35.75%; corporation tax already sits at up to 25% underneath; and the thresholds the whole arrangement leans on have been frozen for years. The standard route quietly became a standard-sized bill.
The £744 in the headline is exact: a director drawing £12,570 in salary and £37,700 in dividends — the classic fill-the-basic-band draw — pays £744 more dividend tax this year than last, with not a pound more drawn. Two points on £37,200 of taxable dividends. It arrived without a letter, because rate rises on dividends never get one.
None of this means the mix is wrong. It means the mix is now worth checking annually, the way the people with adviser-priced planning already do: the right salary is not always £12,570; a spouse on the dividend register moves real money; and a company pension contribution beats both routes for any pound you don’t need this year — it side-steps every tax in the calculator above. Those levers are what the standard arrangement leaves on the table.
How these figures are calculated
Both routes start from the same company profit — the pot before any salary, employer National Insurance or corporation tax. The standard route pays £12,570 of salary, deducts employer NI, charges corporation tax on what remains (2026/27rates — 19% under £50,000, 25% over £250,000, marginal relief between) and pays the rest out as dividends, taxed at 10.75% / 35.75% / 39.35% after the £500 allowance with the £100,000 taper applied. The all-salary route grosses the profit down so salary plus employer NI exactly exhausts it, then charges income tax and employee NI. The marginal figure re-runs the whole computation £100 of profit apart and reports the difference — the same definition of an owner’s marginal rate used everywhere in Kept, so no two pages ever disagree. It assumes this is the owner’s only income and no pension contribution.
The mix you just moved is worth real money. Kept Business finds how much.
The extraction modeller in Kept Business (£199/year) runs salary, bonus, dividends, the spouse split and the company pension on your actual profit — against the standard route, over 20 years. You can see it working on a real extraction before you pay anything.
Model my extraction