Company Extraction Calculator 2026/27

The most tax-efficient strategy combines a director's salary at the personal allowance (£12,570), employer pension contributions (up to £60,000), and dividends. This minimises income tax, National Insurance, and takes advantage of corporation tax deductions.

Dividend tax rates for 2026/27 are: 8.75% for basic rate taxpayers, 33.75% for higher rate, and 39.35% for additional rate. The first £500 of dividends is tax-free. No National Insurance is payable on dividends.

The optimal salary is £12,570 — matching the personal allowance. At this level, you pay zero income tax and zero employee NI. The salary is a deductible expense for the company, saving corporation tax. It also counts as a qualifying year for the State Pension.

Yes. Employer pension contributions are one of the most tax-efficient extraction methods. The company gets corporation tax relief (up to 25% saving), no employer NI is payable, and you pay no personal tax on the contribution. The annual allowance is £60,000.

While technically directors don't 'sacrifice' salary in the traditional sense, paying a lower salary and taking dividends or making pension contributions instead achieves the same tax-efficient result. The key is to keep salary at the personal allowance threshold.

Generally, a combination is best. Take a salary of £12,570 (personal allowance) to get the corporation tax deduction and NI qualifying year, then take the rest as dividends to avoid National Insurance. Pension contributions should also be considered before dividends.