Should I pay myself in salary or dividends?
As a director and shareholder of my own limited company, I want to take money out as tax-efficiently as possible.
Asked by Anonymous on 31 May 2026
1 Answer
Most director-shareholders take a small salary, often set around the National Insurance or personal allowance threshold, and top up income with dividends, since dividends aren't subject to National Insurance and are taxed at lower rates than salary above the tax-free dividend allowance (currently £500). This combination can reduce combined tax and NI compared with taking everything as salary, but the right split depends on your other income, profits available, and pension planning. Get an accountant to run the numbers for your specific circumstances each tax year, as thresholds and rates can change.