Director salary and dividends optimization 2025/26 (education)

Summary

Directors often mix salary and dividends. Salary creates PAYE/NIC; dividends avoid NIC but face dividend tax with their own bands after the allowance.

1. Why not all dividends

NIC credits and certain benefit entitlements may hinge on salary; banks may require payslips.

2. Employer NIC

Our model surfaces employer NIC explicitly as a company cost.

3. Sources

• GOV.UK — PAYE for employers

4. Expansion

Model pension contributions separately; consider annual allowance taper for high earners. Review benefits in kind and P11D obligations.