Salary v dividends in 2026/27

There are several options for drawing profits from a company in a tax-efficient way, however, it often comes down to a combination of salary and dividends.

For many individuals, taking a small salary equal to the £12,570 personal allowance and then taking dividends as the balance of the income required, can be a good approach.

This will continue to apply in 2026/27, even though the tax on dividends will be higher. However, the additional tax involved may mean you need to increase the amount of your dividends to retain the same amount of income.

There are situations where taking a higher salary could be advisable, including where the employment allowance is available to offset any employer’s national insurance arising on salaries.

Please do contact us for personalised advice on how to maximise income from your company.