What’s the Optimum Salary for PSC Directors in 2025/26?
Time to read: 4 minutes

One of the most common tax planning questions for directors of personal service companies (PSCs) is: what salary level is most tax-efficient?

We’ve crunched the numbers using two salary scenarios — £5,000 and £12,570 — across two turnover levels: £50,000 and £100,000. Here’s what the results show for the 2025/26 tax year, assuming a sole director/shareholder setup.

Scenario 1: £50,000 Turnover

• Salary of £5,000 keeps you below the National Insurance (NI) threshold, avoiding both employee and employer NI.
• Salary of £12,570 uses your full personal allowance, but incurs £1,135.50 in employer NI, which is tax-deductible and lowers corporation tax.
• Result: You come out £1,135.54 better off with the £12,570 salary despite paying some NI.

Scenario 2: £100,000 Turnover

• Again, the £12,570 salary results in a higher net income — this time by £776.29.
• This approach increases salary costs (and NI), but reduces profit and corporation tax, ultimately leaving more post-tax income in your pocket.

So, What’s the Optimum Salary in 2025/26?

✅ £12,570 is the most tax-efficient salary level for most PSC directors, assuming:

• You have no other income.
• You want to make the most of your personal allowance.
• You’re the sole employee/director and aren’t using the Employment Allowance (which is not available to sole-director companies without other employees).

Why Not Go Higher Than £12,570?

Earnings above the personal allowance (£12,570) start triggering employee National Insurance and income tax, which often outweigh the additional corporation tax savings. Therefore, £12,570 strikes the best balance — low NI, no income tax, and maximised allowable business expense.

Need Help Structuring Your PSC Tax-Efficiently?

At Taxes Done Right Ltd, we specialise in advising directors on the best way to extract income from their companies. Whether you’re just starting out or scaling to six figures, we’ll ensure you take home as much as possible — legally and simply.

📞 Contact us today for a free consultation.