Salary and dividends in 2026/27: questions for company directors

The suitable mix depends on the company's available profits, the director's other income, employer and employee National Insurance, state-benefit entitlement, pension contributions and cash needs. A figure that works for a sole-director company may not work for a company claiming Employment Allowance or for a Scottish taxpayer.

The dividend allowance is £500 for 2026/27. For dividends above available allowances, the 2026/27 ordinary, upper and additional rates are 10.75%, 35.75% and 39.35% respectively. Your band is based on total taxable income, and dividends can only be paid from available distributable profits with the proper company records.

Director loans, benefits, pension contributions, the High Income Child Benefit Charge and the tapering of Personal Allowance can all change the answer. Record each dividend correctly and ask an accountant to model the full-year company and personal position before acting.