Limited company guide
How directors of small companies are usually paid, and the numbers behind the decision.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnitySalary is deductible for corporation tax but attracts income tax and National Insurance. Dividends are not deductible but are taxed at lower personal rates and carry no National Insurance.
Why the mix matters
The 2026/27 numbers
Doing it properly
Salary is deductible for corporation tax but attracts income tax and National Insurance. Dividends are not deductible but are taxed at lower personal rates and carry no National Insurance.
Most owner-managed companies use a modest salary plus dividends, but the right level depends on the Employment Allowance, your other income and your pension record.
Personal allowance £12,570. Dividend allowance £500, then 10.75%, 35.75% and 39.35% by band. Employer National Insurance at 15% above a £5,000 secondary threshold, with an Employment Allowance of up to £10,500 for eligible employers.
A single-director company with no other employees cannot claim the Employment Allowance, which changes the optimal salary compared with a two-person company.
Dividends need distributable reserves, a board decision and a dividend voucher for each payment. Money taken without either salary or a lawful dividend becomes a directors loan, with a 35.75% section 455 charge (33.75% on loans made before 6 April 2026) if not repaid within nine months and one day of the year end.
Thresholds, rates and deadlines quoted here reflect the 2026/27 UK position. Check current GOV.UK guidance, or ask us, before you rely on them for your own company.
Local help
We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
Yes, if they genuinely work in the business and the pay is commercially justifiable for the work done.
After. Dividends come out of profit that has already borne corporation tax.
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
We regularly work with Xero, QuickBooks, FreeAgent, Sage and connected sales or expense apps. The right setup depends on transaction volume, integrations and the reports you need, not simply the software brand.
The relevant calendar may include annual accounts, Corporation Tax payment and return dates, confirmation statements, VAT returns, payroll submissions and Self Assessment. We map the dates from your company year end and registrations.
No. This page explains general UK rules and common accounting treatment. Your facts, contracts and wider tax position must be reviewed before you rely on a conclusion.
Included approach
Check the current rules
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
Talk to an accountant
Share your next deadline, accounting problem or growth question. We will reply with a clear next step and quote any technical work before it begins.
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Work with us entirely online, or sit down with your accountant at whichever office suits you. Open Monday to Friday, 9:00am to 5:30pm. Office visits are by appointment only, so please book before coming in.
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Pick a time that suits you and a qualified accountant will call you about your company, deadlines and fees.
Appointments run monday to friday, 9:00am to 5:30pm. Your confirmation is emailed straight away.
