Dividends Vs Salary: Directors

Dividends Vs Salary: Directors header image 24th November 2023

With the reduction in employees National Insurance (NI) through the Autumn Statement, to 10% and the drop in the dividend allowance to only £500 from April 2024. Alongside the previously announced rise in Corporation Tax rates. The question directors will ask again is, am I better paying myself a higher salary rather than dividends?


Even with the NI drop, when the calculations are run dividends still come out with the lower tax overall. However the gap is closing and depending on your remuneration structure the appeal of paying your tax on your income through PAYE, rather than having large payments in January and July may mean more than saving some tax. Particularly if cashflow becomes stretched.


For example if you are looking at a remuneration of £100k a year the savings are around £12k a year to pay yourself a minimum salary and the balance as dividends. However if your remuneration structure jumps to £150k a year the savings drop to around £5k.


There is no one rule fits all, the best structure will come down to the level of income you want to take home after tax from the business and the tax bands your company and yourself fall into.


Get In Touch

For more information or advice, contact your local Whitings LLP office.

Disclaimer - All information in this post was correct at time of writing.
Other Blogs
Nick Edgley
26th February 2024 Short Term Lets and Airbnb: Planning Permission

Thinking of offering your property for short term lets? Planning permission may be required.   What’s Changing? From this summer the Government will introduce legislation to require owners of new short term lets in England to secure planning permission to use their properties for this purpose. You will need to be aware of this requirement…

Maddie Milner
22nd February 2024 Companies House fees increasing

From 1st May 2024, Companies House fees are increasing. These increases are following the announcement of the Economic Crime and Corporate Transparency (ECCT) Bill, which is giving Companies House greater powers in verifying the accuracy of information and tackling economic crime.   Some of the main rises in costs are as follows:   New fee…

Louise Bassett
21st February 2024 How is the government supporting farmers?

Let’s ask the question, ‘How is the government supporting farmers?’   DEFRA shared a press release from the Prime Minister yesterday, citing his and his party’s commitment to farmers and rural communities.   We already know that Sustainable Farming Incentive (SFI) and Countryside Stewardship payments are being increased across the board by approximately 10%, but…

Shamus Chaplin
20th February 2024 Update on Double-Cab Pick-Ups: HMRC are reversing

Update on Double-Cab Pick-Ups   On the 12th February 2024, HMRC announced that their interpretation of the legislation had changed regarding the favourable tax treatment of pick-up trucks from 1st July 2024. However, after consulting farmers, construction workers and other industry professionals they have now reversed their decision!     Current Position HMRC interprets the…

Ian Piper
19th February 2024 SME Ely Business Awards 2024: 1 Week Left To Enter!

There is just one week remaining to enter the SME Ely Business Awards for 2024!   Celebrate your business’ achievements and be in with a chance of winning by entering today. Entries close on Thursday 26th February 2024 at 3pm. Find Out More Click here to find out more about the SME Ely Business Awards…

Maddie Milner
16th February 2024 Companies House changes from 4th March 2024

,Find out more about the upcoming Companies House changes from 4th March 2024 here.     Registered email addresses One of the main changes from the 4th March 2024 are Companies House require all companies to provide a registered email address which will be collected within your companies next Confirmation Statement.   New companies will…