Home / Questions / What Is the Most Tax-Efficient Director Salary?
Last updated 23 October 2026. Written by the Limited Company Accountant UK team, part of Accotax. Figures are for the 2026/27 tax year; always check GOV.UK for the latest rates.
Short answer: A common approach for a sole director is a salary at or around the £12,570 personal allowance, with the rest taken as dividends. The best figure depends on your Employment Allowance, other income and State Pension goals.
At a glance
| Personal allowance | £12,570 |
|---|---|
| Employer NI threshold | £5,000 secondary threshold at 15% |
| Employment Allowance | Not available to sole-director-only payrolls |
| Check each year | Thresholds change |
Why many directors pick the personal allowance
A salary at the personal allowance is deductible for Corporation Tax and incurs no income tax. It also protects a State Pension qualifying year if it is above the lower earnings limit.
Employer NI is the trade-off
A salary above £5,000 triggers employer NI at 15%. In some situations a lower salary is cheaper overall, so a year-by-year calculation is worth doing.
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The bottom line
A common approach for a sole director is a salary at or around the £12,570 personal allowance, with the rest taken as dividends. If you would rather not do it alone, our fixed fees start at £45.83 + VAT a month.
Frequently asked questions
Can I take no salary at all?
Yes, but you may miss a qualifying year for your State Pension unless you have other earnings.
Do salary rules change every year?
Thresholds and rates are reviewed in each Budget, so confirm before each tax year.
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Our packages start at £45.83 + VAT and cover accounts, tax and deadlines. Get a free quote or call 0203 4411 258.
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