Director Pay Planning
Dividend vs Salary Optimiser (Scotland) 2026/27.
Find the optimal salary and dividend split for a Scottish limited-company director in 2026/27. Model personal allowance salary, employer NI thresholds, the £500 dividend allowance and how Scottish income tax rates affect the crossover point versus rUK directors.
For a Scottish limited-company director in 2026/27, the optimal base salary is usually £12,570 (the personal allowance) to avoid income tax — or £9,100 to stay below the £5,000 employer NI secondary threshold if Employment Allowance cannot be claimed, saving £533 in employer NI. Dividends above the £500 allowance are taxed at 10.75% (basic), 35.75% (higher) or 39.35% (additional) using UK rates. Scottish income tax rates above £43,662 at 42% mean the salary-dividend crossover point differs from rUK directors.
Optimal salary
£12,600
Maximises take-home at £46,025
- Dividends
- £37,400
- Corp tax
- £13,809
- Employer NI
- £1,140.00
- Income tax
- £6.00
- Dividend tax
- £3,966.75
- Employee NI
- £2.40
| Salary | Dividends | Corp tax | Personal tax | Take-home |
|---|---|---|---|---|
| £0 | £50,000 | £17,450 | £8,271 | £41,729 |
| £5,000 | £45,000 | £16,125 | £6,484 | £43,516 |
| £9,100 | £40,900 | £14,876 | £5,018 | £44,982 |
| £12,570 | £37,430 | £13,818 | £3,970 | £46,030 |
| £12,600 | £37,400 | £13,809 | £3,973 | £46,025 |
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Questions
Frequently asked
questions.
For a single director who cannot claim the Employment Allowance, the optimal salary is typically £9,100 — just below the Secondary (employer) NI threshold of £5,000 plus the Employment Allowance gap. However, for directors who can claim Employment Allowance (usually with at least one other employee), the optimal is often £12,570 to use the full personal allowance without triggering personal income tax. The right answer depends on your specific circumstances, which this calculator models.
The tax-free dividend allowance is £500 for 2026/27. Dividends above this are taxed at 10.75% (basic rate), 35.75% (higher rate), or 39.35% (additional rate), depending on your total income. The allowance was reduced from £2,000 to £1,000 in April 2023 and again to £500 in April 2024.
Scottish taxpayers pay different income tax rates on non-savings, non-dividend income (salary) — with rates ranging from 19% (Starter) to 48% (Top). However, dividend tax rates are set UK-wide and are the same regardless of whether you live in Scotland or England. This means the split between salary and dividends has a different optimal point for Scottish directors, as the marginal salary tax rate diverges from the rUK rates.
Yes. From April 2025, the Employer (secondary) NI threshold dropped to £5,000 and the rate rose to 15%. This means employer NI now applies on salary above just £5,000 — making very low salaries (£0 to £5,000) more attractive from an NI perspective for companies without Employment Allowance. The calculator models this fully.
Yes. Salary reduces the company's taxable profit, which in turn reduces Corporation Tax. The optimiser accounts for CT at 19% (profits up to £50,000), the marginal relief band (£50,000–£250,000), and 25% (above £250,000). This means a higher salary isn't simply bad — it also saves CT, which must be weighed against personal tax costs.
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