How much can I pay myself?

Start from the other end. Say what you want in your pocket, and this works out the salary and dividend mix that gets you there, and how much profit the company has to make to fund it once every tax has been paid.

What you want to take home

Target take-home for the year

Cash in your pocket, after all tax and National Insurance.

Your other income

Rent, a pension, another job. It sits below what you take from the company.

Tax year

Claim the Employment Allowance A company whose only employee is a single director does not qualify. Leave this unticked if that is you.

The mix that does it

Three ways of getting there

Same take-home, different cost to the company.

Where the company's money goes

You keep Corporation Tax Income tax and dividend tax National Insurance

The gap between what you take and what the company earns

Most directors are surprised by the size of it. To put £60,000 in your pocket the company has to earn noticeably more than £60,000, because Corporation Tax comes off the profit before the dividend is paid, and income tax comes off the dividend after it.

The gap widens as the target rises. Once your income passes £50,270 the dividends move into the higher rate, and above £100,000 the personal allowance is withdrawn at £1 for every £2, so a slice of income around there carries a much higher effective rate than the headline suggests.

An employer pension contribution is deliberately left out of this. It is usually the most efficient way to get money out of a company, because it is deductible for Corporation Tax and carries no National Insurance, but it is money for later rather than cash now. If the number below looks uncomfortable, that is the conversation worth having.