Salary or dividend?
The increase in dividend tax from April 2026 is a good opportunity to step back and review how you pay yourself from your company.
For most owner-managed businesses, remuneration is not about choosing one route, but finding the right balance between salary, dividends and pensions – and that balance can shift over time.
Salary
Salary is straightforward, but it comes with income tax and National Insurance (for both you and, in many cases, the company). Even so, it can play an important role, particularly where it helps to:
- Make use of your personal allowance
- Protect your State Pension record
- Create a foundation for employer pension contributions
Dividends
Dividends remain free of National Insurance, which is why they have been popular. However, with higher dividend tax rates from April 2026, it may make sense to reduce reliance on dividends alone or adjust how and when they are taken.
One size doesn’t fit all
The right mix depends on a range of factors, including company profitability, other household income, future plans and personal cashflow needs. What is efficient for one director may not be right for another – and the “right” answer can change year to year as tax rules evolve.
We’re here to help
Azets’ tax specialists can help you review your remuneration strategy and identify the most appropriate balance between salary, dividends and other options. Our advisers at Azets Wealth Management can also support you with longer‑term planning. Get in touch via the form below to discuss next steps.
