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Salary/Dividend Calculator |
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As a company director you can save tax by choosing the best way to draw remuneration from profits - via salary or via dividend. The most tax efficient way depends both on your personal tax rate and on the corporation tax rate.
£25,000 has been used as a remuneration figure for this calculator to illustrate the comparisons. In reality there may be other personal income to take account of, every case is different. The calculations are complex and professional advice should be taken. |
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Working calculations:
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Salary Option |
Dividend Option |
Notes |
| Resulting taxable profits |
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| Resulting Corporation Tax |
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| Available gross salary |
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| Employer's NI on salary |
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| Available dividend |
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Net Disposable Income of Director
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Salary |
Dividend |
Notes |
| Dividend |
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| Salary |
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| Less PAYE on salary |
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| Employee's NI on salary |
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| Additional tax on dividend |
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| Total |
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| Result: The dividend route produces £0 more disposable income. |
Breakdown of where the £25,000 goes
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Salary |
Dividend |
| Corporation Tax |
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| Additional tax on dividend |
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| PAYE |
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| Employee's NI |
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| Employer's NI |
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| To Director |
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| Total |
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The decision to declare a dividend is one that must be considered alongside the other implications of extracting profits in this manner as opposed to the payment of a salary or bonus. To discuss the most beneficial profit extraction strategy for your situation please contact us.
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