Director pay: dividends vs salary (and how to blend)

Choosing how to pay yourself as a director affects tax, NI and cashflow. Here’s a straightforward approach.

The building blocks

You generally combine a small salary with dividends from post‑tax profits.

Why a small salary

It protects state benefits and can be deductible for corporation tax while keeping NI low.

When dividends make sense

Dividends are not subject to employer NI, but require available profits and correct paperwork.

A simple blend

Take a salary around the NI threshold, then top up with dividends. Review quarterly alongside cash and forecasts.