Dividend Pool
£53,311.05
Take-Home
£57,482.32
Total Tax
£22,517.68
Rates & sources
UK company rates (Corporation Tax, VAT, payroll NI) as published by HMRC and Companies House.
Source: HMRC — Running a business — figures refreshed at the start of each tax year.
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When to use this calculator
- Before pricing a job, setting margin targets, or reviewing hiring costs.
- When you want to test sensitivity around volume, VAT, markup, or overhead changes.
- When you need a practical estimate before committing to a budget or proposal.
- When you are modelling break-even volume and want to see how it shifts as overheads or prices change.
- When you are preparing a quote and need to verify that the margin holds after materials, labour, and VAT are accounted for.
Worked example: £80k profit, £12,570 salary, dividends from rest
Use these sample inputs as a quick scenario test, then change one variable at a time to compare outcomes.
Profit
£80,000
Less salary (£12,570)
£67,430
Corp Tax (Marginal Relief)
£14,119
Dividend pool
£53,312
Personal tax on salary (covered by PA)
£0
Salary NI (below threshold)
£0
Dividend tax (basic + higher band)
£3,981
Director take-home
£61,901
Total tax (CT + dividend)
£18,100
Effective combined tax rate ~22.6% — significantly less than full PAYE on the same gross. Higher salaries trigger NI which is the main reason the structure works.
How to read your results
Dividend Pool
Use this metric to compare scenarios side by side and understand how changes in the key inputs drive the final outcome. If the figure surprises you, isolate one variable at a time and rerun the calculation to identify which assumption is responsible.
Take-Home
Use this metric to compare scenarios side by side and understand how changes in the key inputs drive the final outcome. If the figure surprises you, isolate one variable at a time and rerun the calculation to identify which assumption is responsible.
Total Tax
Review this figure alongside your gross income so you can understand the true cost of deductions and plan around any thresholds before the tax year closes. If the figure looks higher than expected, check whether any pension or gift-aid contributions could reduce your taxable income.
Method & assumptionsAuthoritative sources
This calculator compares the net take-home income from two common extraction strategies: a salary-only approach and a mixed salary-plus-dividends approach. For the salary scenario it deducts income tax and employee National Insurance at current bands, plus employer National Insurance at 13.8%, with the employer NI cost reflected in the total company outlay. For the dividend scenario it first applies corporation tax to company profits, then calculates dividend tax on the extracted amount after the dividend allowance.
The comparison assumes you are a sole director-shareholder with no other income sources. It does not account for personal pension contributions, the Employment Allowance (which may offset employer NI for eligible companies), or devolved income tax rates in Scotland. Treat results as a guide and confirm with an accountant.
Common mistakes
- !Using optimistic assumptions without testing a more cautious scenario as well.
- !Comparing outputs from different tools without checking that the inputs match.
- !Treating the result as a final quote instead of a planning estimate.
- !Forgetting to include employer National Insurance contributions when modelling the true cost of a new hire.
- !Using revenue figures in place of gross profit when calculating margin percentage, which produces a misleadingly high result.
What to do next
- Try at least one more scenario with a lower price or higher cost so you can see the margin floor.
- Use the related calculators below to cross-check VAT, payroll, or break-even figures from another angle.
- Open one of the linked guides if you need more context before you finalise a quote or budget.
- If the margin is tighter than expected, identify which single input has the biggest impact and focus any negotiation there first.
- Keep a record of the assumptions behind this estimate so you can revisit and update it when costs or volumes change.
Frequently asked
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