Free UK Director Tax Calculator 2025/26

Calculate your optimal salary-dividend split, corporation tax, PAYE & NIC to maximize take-home pay. Free calculator for limited company directors & agency owners.

Your Details

Enter your financial information

Examples: Client fees, retainer payments, project income

Examples: Software, rent, marketing costs

Maximum: £12,570 (personal allowance)

Max available: £42,514

Get Your Tax Calculation

Fill in your details above and click "Calculate My Taxes" to see your personalized results.

Free calculation with no obligations

UK Contractor Tax Calculator 2025/26: Calculate Your Take Home Pay

Calculate your take-home pay for 2025/26. Free UK contractor tax calculator that shows exactly what you'll pay in PAYE, National Insurance, corporation tax, and dividend tax. Whether you're a contractor, freelancer, or limited company director, you get instant results. No guesswork.

What This Calculator Shows You

  • Salary Tax (PAYE) – Income tax on your director's salary
  • Employee NIC – National Insurance you pay (8% on salary £12,571-£50,270)
  • Employer NIC – National Insurance your company pays (15% on salary above £5,000)
  • Corporation Tax – Tax on company profits (19-25% depending on your profit level)
  • Dividend Tax – Tax on dividends you take (8.75% basic, 33.75% higher, 39.35% additional rate)
  • Net Take Home Pay – Your actual income after all taxes
  • Effective Tax Rate – Your overall tax burden as a percentage

Most Tax-Efficient Salary for Directors 2025/26

Here's the thing. The optimal director's salary for 2025/26 is £12,570, the personal allowance threshold. Why? Because it lets you:

  • Pay zero income tax on your salary
  • Qualify for State Pension contributions
  • Deduct salary as a business expense before corporation tax
  • Minimise employee National Insurance contributions
  • Take remaining profits as tax-efficient dividends

How to Calculate Your Optimal Salary-Dividend Split

Here's how it works:

  1. Set your salary at £12,570 (personal allowance) or £6,500 (minimum for State Pension)
  2. Calculate your gross profit – Revenue minus operating expenses
  3. Deduct business expenses – Salary plus Employer NIC (15% on salary above £5,000)
  4. Calculate corporation tax – 19-25% on taxable profit
  5. Remaining profit is available for dividends
  6. Pay dividend tax – 8.75% basic rate (after £500 allowance)

2025/26 UK Tax Rates for Contractors

Income Tax Rates

  • £0 - £12,570: 0% (Personal Allowance)
  • £12,571 - £50,270: 20% (Basic Rate)
  • £50,271 - £125,140: 40% (Higher Rate)
  • Over £125,140: 45% (Additional Rate)

Dividend Tax Rates

  • First £500: 0% (Dividend Allowance)
  • Basic Rate: 8.75%
  • Higher Rate: 33.75%
  • Additional Rate: 39.35%

Frequently Asked Questions (FAQs)

What's the most tax-efficient way to pay myself from my limited company?

Take a low salary (£12,570) within the personal allowance, then pay the rest as dividends. This minimises income tax and National Insurance while maximising your take-home pay. Simple.

How much tax do I pay on dividends in 2025/26?

You pay 0% on the first £500 (dividend allowance), then 8.75% basic rate, 33.75% higher rate, or 39.35% additional rate depending on your total income. Dividend tax is much lower than income tax plus NIC on salary.

What's the difference between employee and employer National Insurance?

Employee NIC is what you pay (8% on salary £12,571-£50,270, then 2%). Employer NIC is what your company pays (15% on salary above £5,000 in 2025/26). The company's NIC is a deductible business expense before corporation tax.

How do I calculate my corporation tax?

Corporation tax is calculated on your company's taxable profit (revenue minus expenses including salary and employer NIC). The rate is 19% for profits up to £50,000, then tapers to 25% for profits over £250,000.

Can I take dividends if my company makes a loss?

No. Dividends can only be paid from available profits (retained earnings). You need sufficient post-tax profit to cover dividend payments, otherwise they're illegal and could be treated as loans.

What's the optimal salary for State Pension contributions?

The minimum salary for a qualifying State Pension year is £6,500 for 2025/26. However, £12,570 (personal allowance) is often better as it's still tax-efficient while building higher State Pension entitlement.

Need Help With Your Contractor Taxes?

This calculator gives you accurate estimates for 2025/26, but every contractor's situation is different. We help contractors, freelancers, and limited company directors optimise their tax efficiency and maximise take-home pay.

We can help with IR35 compliance, tax planning, dividend strategies, expense claims, and year-end accounts.Get in touch for advice tailored to your business.

Disclaimer: This calculator provides estimates based on standard 2025/26 UK tax rates and assumes you qualify for the full personal allowance. Actual tax liability may vary based on individual circumstances, Scottish tax rates, additional income sources, or other factors. For personalised tax advice, please consult a qualified accountant.