💸 Who Says UK Taxes Are High? See How to Pay Just 9% Tax Below! 😲

If you’re a director of your own limited company, you can keep more of your money with the right pay structure — and yes, you could end up paying just 9% in tax! Let’s break down the two most common options: Salary vs Dividends.

💼 Option 1: Salary – Low Tax with a Bonus Benefit

Salaries are taxed like normal employment:

• 20% Income Tax
• 8% Employee National Insurance (NI)
• ✅ But… salary is a business expense – meaning it reduces Corporation Tax (currently 19%)

Result? Once you factor in the Corporation Tax saving, the net cost to the company is around 9%.

🧾 Option 2: Dividends – Looks Cheaper, But Is It?

Dividends are taken from company profits after Corporation Tax:

• 19% Corporation Tax
• Then 8.75% Dividend Tax (basic rate)

Total tax cost? Roughly 27.75%

So while there’s no NI on dividends, you’re paying tax after profits have already been taxed once.

⚖️ Verdict: What’s the Smart Play?

The most tax-efficient setup for many directors?

✅ Take a small salary (just above the NI threshold, to qualify for benefits & Employment Allowance)
✅ Then top up with dividends to keep things flexible

⚠️ Important Points:

• 💡 This example assumes you’re a basic rate taxpayer
• 🧾 It also assumes your company has profits under £50,000, so the 19% Corporation Tax rate applies
• 👥 We’re also assuming there are at least 2 employees on payroll earning over secondary threshold, allowing your company to claim the £5,000 Employment Allowance
• 📆 Tax rates and thresholds can change – always check with an accountant!

💬 Want to see how this works for your business?

📞 Call 0333 880 8600
📧 Email us: Tax@TaxesDoneRight.co.uk
🌐 Visit: www.taxesdoneright.co.uk
Let’s make tax work for you — not the other way around.