Massey Accounting Company

making your business less taxing

Optimum Directors’ Salary and Dividends for 2018/19

Leave a comment

What is the optimum directors’ salary and dividend mix for 2018/19? Or click here if you’re looking for our more recent 2019/20 recommendation.

Small companies will usually pay their directors with a mix of salary and dividends. The level of the directors’ salary is usually set in order to avoid any income tax and national insurance. On this basis the recommended remuneration package for the forthcoming tax year is:


Upper limits (if intention is to fully utilise the basic rate tax band)



Directors’ salary – per annum



Dividends – per annum




It should be noted that dividends exceeding both the personal allowance and the dividend allowance of £2,000 (previously £5,000) will be taxed via the directors’ personal income tax return at 7.5%. Meaning that if dividends are paid all the way up to the basic rate band of £46,350 (2017/18 was £45,000) there will be a personal tax bill of £2,438 (last year £2,138)

For those companies that have more than just a single director on their payroll then they will continue to benefit from the Employment Allowance which reduces the company’s Class 1 National Insurance contributions (Employer’s N.I.) by up to £3,000.

In such cases there may be an opportunity for directors to eke out a little more tax savings by paying themselves a salary of £11,850 and dividends up to a maximum of £34,500 (the overall tax saving between the director and the company being around £240).

This second option will not be the best fit for everyone. More than ever, personal circumstances must be carefully considered to give the best results.

Each client of Massey Accounting Company will be receiving a personalised recommendation shortly.

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.