Dividend vs Salary Optimiser (Scotland) 2026/27.

There is no universal optimal salary. In 2026/27 the employer NIC secondary threshold is £5,000 and the personal allowance is £12,570. Corporation Tax, employer NIC, Employment Allowance eligibility, other income, associated companies and available distributable reserves can all change the answer. This tool compares affordable scenarios rather than prescribing one fixed salary.

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.