Director Tax Calculator
Calculate your tax liability on salary, dividends, and savings income for the 2025/26 tax year. Specifically designed for company directors and shareholders.
Comprehensive Calculation
Calculate tax on salary, dividends, and savings income in one place
Tax Efficiency
Understand the most tax-efficient mix of salary and dividends
Detailed Breakdown
See exactly how each income type is taxed and your allowances
Optimize Strategy
Plan your director's remuneration for maximum efficiency
Director Tax Calculator 2025/26
Calculate your tax on salary, dividends, and savings income
Important Notes:
- This calculator uses 2025/26 tax year rates and thresholds
- Personal allowance reduces by £1 for every £2 earned over £100,000
- Dividend allowance is £500 (tax-free dividends)
- Dividend tax rates: 8.75% (basic), 33.75% (higher), 39.35% (additional)
- Savings allowance: £1,000 (basic rate), £500 (higher rate), £0 (additional rate)
- Employee NI: 8% on £12,570-£50,270, then 2% above
- No NI is payable on dividends or savings income
- This is an estimate only - consult a tax professional for accurate advice
Understanding Director Taxation
Salary
Your director's salary is subject to Income Tax and National Insurance. Most directors set salary at exactly £12,570 — the Personal Allowance threshold. This uses your full personal allowance, keeps you in the state pension system, and avoids employee NIC. Employer NIC applies on earnings above £5,000, so keeping salary low reduces your company's cost too.
Dividends
Dividends are paid from post-corporation-tax profit and carry no National Insurance. You have a £500 tax-free dividend allowance, then pay 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate). Keeping total income below £50,270 keeps you in the basic rate band — the key threshold most directors target.
The £100k Trap
If your total income (salary + dividends) exceeds £100,000, your Personal Allowance tapers — losing £1 for every £2 above £100,000. This creates an effective 60% marginal tax rate between £100,000 and £125,140. Staying below £100,000 or using pension contributions to reduce income below this threshold is a key planning priority.
Pension Contributions — The Often-Missed Lever
Company pension contributions are a direct company expense — they reduce your corporation tax bill, carry no employer or employee NIC, and don't count as personal income for tax purposes. If your dividend income is approaching £50,270 or £100,000, redirecting profit into a company pension contribution avoids the higher band while still extracting value from the company. The annual allowance is £60,000 (2025/26).
Director's Loan Account
Taking money from your company beyond salary and declared dividends creates an overdrawn Director's Loan Account (DLA). If the DLA remains overdrawn nine months after your company's year end, HMRC charges S455 tax at 33.75% of the outstanding balance. Always ensure dividends are formally declared before withdrawing funds, and keep bookkeeping current so your reserve position is clear before each withdrawal.
Related Guides
Go deeper on the topics that affect your tax position as a director.
Salary vs Dividends: The Optimal Director Pay Strategy for 2025/26
A step-by-step breakdown of the most tax-efficient remuneration structure, with a worked example showing over £7,500 in potential savings.
Read guide →How to Keep Your Income Tax-Efficient Year to Year
Smoothing income across tax years prevents unnecessary jumps into higher bands. Here is the planning approach that works best for most UK directors.
Read guide →Company Pension Contributions — The Most Tax-Efficient Way to Extract Profit
Company pension contributions reduce corporation tax and carry no NIC. Learn how to use them alongside dividends for maximum efficiency.
Read guide →Director's Loan Accounts and S455 Tax
An overdrawn director's loan account triggers a 33.75% S455 tax charge if not repaid within 9 months. Here is what to watch for.
Read guide →Disclaimer: This calculator provides estimates only and should not be considered as professional tax advice. Director remuneration strategies should be discussed with a qualified accountant. Corporation tax and employer's NI are not included in these calculations.
Book Your Free Consultation
Choose a time that suits you — you'll speak directly with Alex or Shadma, not a chatbot.
You'll receive an instant email confirmation once booked — and a reminder before the call.