Director tax isn’t about one number. It’s about interaction.
Salary affects:
- Corporation Tax
- Employer’s National Insurance
- Personal allowances
Dividends affect:
- Personal tax bands
- Dividend allowance erosion
- Effective marginal tax rates
Then layer in frozen thresholds, reduced allowances, and Corporation Tax bands, and suddenly “just take dividends” becomes terrible advice.
This is exactly why generic calculators fail. Director tax isn’t linear. It’s conditional.
A proper calculation needs to consider:
- Optimal salary level
- Dividend mix
- Company profit
- Personal circumstances
That’s why I built a salary or dividends calculator specifically for 2026–27. Not to replace advice, but to show the real numbers. It’s free and you can download it here.
If you don’t understand how your tax is calculated, you’re not planning, you’re guessing.
If you would like to discuss more about your tax planning please contact us at The Accountancy Office and we will be happy to help.