Decisions / Salary Or Dividend For A Ltd Company?
Salary Or Dividend For A Ltd Company?
On 6 April 2026 the ordinary and upper dividend rates each rose two points, to 10.75% and 35.75%. The additional rate stayed at 39.35%, and the allowance is still £500. Corporation tax is 19% to £50,000 of profits and 25% above £250,000, with marginal relief between. Salary versus dividend is that interaction on a timeline, not a slogan about the “optimal mix”. Change the split with a business-income milestone and compare two paths. How those rates are tabulated is in Calculation Methodology.
A journey can hold this event and later ones. Two free journeys, 15-year cap. Paid paths run 30 years.
Then The Events That Follow
This question starts the journey. Add later events on the same years so tax, leftover cash, childcare and retirement move together. A calculator answers one slice. Free paths run 15 years; paid unlocks run 30.
How Kumberi Models Extraction
Company Profit And Director Tax In The Same Year
A contractor / Ltd journey holds company revenue, allowable expenses, director salary and a dividend policy (fixed amount or a share of remaining profit, as you set). Corporation tax is calculated in the business engine, including marginal relief where it applies. Personal tax on salary, NI and dividends uses the 2026/27 rates in the product (10.75% / 35.75% / 39.35% on dividends above the £500 allowance). Rate tables are in Calculation Methodology.
A Dated Change Of Mix — DLA Is Not A Dividend
The decision module seeds a business-income-change milestone so you can test a different salary and dividend split from a date. Directors’ loan drawdown is a separate field: repayments of credit are modelled as a return of capital, not as a dividend. Overdrawn s455 is out of scope.
Year-Slice Calculator Versus The Life Around It
The salary-versus-dividend calculator is the right tool for a single-year illustration. A journey is for when extraction sits next to a mortgage, a company-funded purchase, or retirement drawdown of remaining DLA credit. If you mark the company **inside IR35**, remaining profit is treated as deemed employment rather than salary and dividends — the engine does not decide that status for you.
Use The Calculator For A Year; Use A Journey For The Life Around It
If you only need this year’s corporation tax, NI and dividend tax under a stated mix, open the calculator. If the mix has to live alongside a house purchase, DLA or stopping work, model it on a journey. The Directors' Loan Account guide is the write-up of credit balances.
Open Salary Vs Dividend CalculatorWhat This Page Does Not Model
- The engine does not decide whether a contract is inside or outside IR35. If you mark a company as inside, remaining profit is treated as deemed employment (PAYE and NI), not salary and dividends.
- VAT is not a VAT return (no capital allowances, partial exemption, or mixed rates). Each Ltd keeps its own cash; there are no inter-company loans.
- Nothing here is tax advice or a recommendation of a salary number.
Common Questions
Does Kumberi Calculate The Best Salary And Dividend Mix?
No. It illustrates tax and cash under the mix you enter. “Best” would be advice. Compare two journeys if you want to see two mixes side by side.
Is A Directors’ Loan The Same As A Dividend?
No. A directors’ loan credit is money the company owes the director. Repayments are modelled as a return of capital, not as taxable dividend income. Overdrawn s455 treatment is out of scope — see Directors' Loan Account.
Does The Model Include Corporation Tax Marginal Relief?
Yes, where those rules apply in the tax engine for the company profits in the journey. Inspect Calculation Methodology for the rates used in a tax year.
How The Rules Are Documented
These are the Learn pages behind this decision — inspectable methodology, not extra opinion pieces. The full set lives on Learn.
- Directors' Loan AccountCredit balances and repayments that are not dividends; s455 is out of scope.
- Calculation MethodologyCorporation tax, NI and dividend tax assumptions in a run.
- Salary SacrificeOpt-in if the director’s pay is set that way — not a default extraction mix.
Other Decisions
- What If The Company Owes The Director?When the company owes the director — credit, purchases and repayments that are not dividends.
- What Does A Company Car Cost In Tax?BiK on P11D list price — 4% for a zero-emission car in 2026/27 — next to salary and company cash.
- What If My Pay Changes?A new salary is not take-home times twelve — bands, loans and childcare gates can all move.
Model The Chain On A Timeline
This event, then the ones after it. Two free journeys, 15-year cap. Paid paths run 30 years.
Kumberi is educational modelling, not a financial adviser. Figures are illustrations under stated UK tax and pension assumptions. Nothing on these pages is a recommendation to buy, sell, borrow, extract or retire.