£100,000 Company Profit: How Much Can You Take Home? (2025-26)
You've got £100,000 in company profit. How much actually ends up in your pocket? We run the numbers on three different strategies and reveal which one puts the most money in your bank account—with exact calculations for 2025-26.
Last Updated: January 2026 | Tax Year: 2025-2026
£100,000 profit. Three ways to extract it. Three very different results:
| Strategy | You Keep | You Lose to Tax |
|---|---|---|
| All salary | £61,370 | £38,630 |
| All dividends | £64,889 | £35,111 |
| Optimal mix | £66,543 | £33,457 |
The difference between worst and best? £5,173 per year. Over a decade, that's £50,000+ staying in your pocket instead of HMRC's.
Here's exactly how each strategy works—with full calculations you can verify.
Quick Summary
- How a £100k company profit typically splits between salary, dividends, and tax.
- Why Employer NI and Corporation Tax drive the optimal mix.
- How your take-home changes if you keep profits in the company.
The Scenario
Company profit: £100,000 (gross, before Corporation Tax and your pay) Director: Single shareholder-director Other income: None Student loans: None Location: England/Wales/Northern Ireland (not Scotland) Tax year: 2025-26
Let's see what you take home under each strategy.
Strategy 1: All Salary (Worst Case)
Taking everything as salary is the most expensive option, but some directors do it anyway—often because they don't realize there's a better way.
The Calculation
First, we need to figure out how much salary £100,000 profit can support:
Employer National Insurance adds 15% on salary above £5,000. So the maximum salary we can pay from £100,000 is:
Salary calculation (max salary from £100k profit)
- Salary + Employer NI = £100,000
- Salary + (Salary - £5,000) × 15% = £100,000
- Salary × 1.15 = £100,000 + (£5,000 × 0.15)
- Salary × 1.15 = £100,750
- Salary = £87,608
Let's round to £87,608 for accurate numbers.
Tax Breakdown
| Item | Calculation | Amount |
|---|---|---|
| Gross salary | £87,608 | |
| Employer NI | (£87,608 - £5,000) × 15% | £12,391 |
| Total company cost | £99,999 |
Now your personal taxes:
| Item | Calculation | Amount |
|---|---|---|
| Personal Allowance | £12,570 | |
| Basic rate band | £12,571 - £50,270 | £37,699 |
| Higher rate band | £50,271 - £87,608 | £37,338 |
| Tax Type | Calculation | Amount |
|---|---|---|
| Income Tax (Basic) | £37,699 × 20% | £7,540 |
| Income Tax (Higher) | £37,338 × 40% | £14,935 |
| Total Income Tax | £22,475 | |
| Employee NI (8%) | (£50,270 - £12,570) × 8% | £3,016 |
| Employee NI (2%) | (£87,608 - £50,270) × 2% | £747 |
| Total Employee NI | £3,763 |
The Result
| Amount | |
|---|---|
| Gross salary | £87,608 |
| Income Tax | -£22,475 |
| Employee NI | -£3,763 |
| Your take-home | £61,370 |
| Amount | |
|---|---|
| Company profit | £100,000 |
| Employer NI | -£12,391 |
| Income Tax | -£22,475 |
| Employee NI | -£3,763 |
| Total tax | £38,630 |
| Effective rate | 38.6% |
Verdict: You keep £61,370 from your £100,000 profit—losing nearly 39% to tax.
Strategy 2: All Dividends (Better, But Not Optimal)
What if you take no salary and extract everything as dividends?
The Calculation
Step 1: Corporation Tax
With £100,000 profit, you're in the marginal relief band (£50,000 - £250,000).
The marginal relief formula:
- Tax at main rate (25%): £100,000 × 25% = £25,000
- Marginal relief: (£250,000 - £100,000) × 3/200 = £2,250
- Corporation Tax: £25,000 - £2,250 = £22,750
Effective CT rate: 22.75%
Step 2: Dividend available
£100,000 - £22,750 = £77,250
Step 3: Dividend Tax
With no salary, your Personal Allowance is unused, so it shelters the first £12,570 of dividends at 0% tax.
| Band | Dividends | Rate | Tax |
|---|---|---|---|
| Personal Allowance | £12,570 | 0% | £0 |
| Dividend Allowance | £500 | 0% | £0 |
| Basic rate (to £50,270) | £37,200 | 8.75% | £3,255 |
| Higher rate | £26,980 | 33.75% | £9,106 |
| Total | £77,250 | £12,361 |
The Result
| Amount | |
|---|---|
| Dividends received | £77,250 |
| Dividend Tax | -£12,361 |
| Your take-home | £64,889 |
| Amount | |
|---|---|
| Company profit | £100,000 |
| Corporation Tax | -£22,750 |
| Dividend Tax | -£12,361 |
| Total tax | £35,111 |
| Effective rate | 35.1% |
Verdict: You keep £64,889—that's £3,519 more than all-salary. But we can do better.
Strategy 3: Optimal Mix (Best Case)
The optimal strategy combines a tax-efficient salary with dividends.
The Calculation
Step 1: Set salary at £12,570 (Personal Allowance)
| Item | Calculation | Amount |
|---|---|---|
| Gross salary | £12,570 | |
| Income Tax | PA covers all | £0 |
| Employee NI | Below threshold | £0 |
| Employer NI | (£12,570 - £5,000) × 15% | £1,136 |
Step 2: Remaining profit for Corporation Tax
£100,000 - £12,570 - £1,136 = £86,294
Step 3: Corporation Tax
Still in marginal relief band:
- Tax at main rate (25%): £86,294 × 25% = £21,574
- Marginal relief: (£250,000 - £86,294) × 3/200 = £2,456
- Corporation Tax: £21,574 - £2,456 = £19,118
Effective CT rate: 22.15%
Step 4: Dividend available
£86,294 - £19,118 = £67,176
Step 5: Dividend Tax
Your salary uses up the Personal Allowance, so dividends start being taxed right away:
| Band | Dividends | Rate | Tax |
|---|---|---|---|
| Dividend Allowance | £500 | 0% | £0 |
| Basic rate (£12,571 to £50,270) | £37,200 | 8.75% | £3,255 |
| Higher rate | £29,476 | 33.75% | £9,948 |
| Total | £67,176 | £13,203 |
The Result
| Amount | |
|---|---|
| Salary | £12,570 |
| Dividends | £67,176 |
| Dividend Tax | -£13,203 |
| Your take-home | £66,543 |
| Amount | |
|---|---|
| Company profit | £100,000 |
| Employer NI | -£1,136 |
| Corporation Tax | -£19,118 |
| Dividend Tax | -£13,203 |
| Total tax | £33,457 |
| Effective rate | 33.5% |
Verdict: You keep £66,543—the best result of all three strategies.
Side-by-Side Comparison
| Strategy | Take-Home | Total Tax | Tax Rate | vs All Salary |
|---|---|---|---|---|
| All Salary | £61,370 | £38,630 | 38.6% | — |
| All Dividends | £64,889 | £35,111 | 35.1% | +£3,519 |
| Optimal Mix | £66,543 | £33,457 | 33.5% | +£5,173 |
The optimal strategy saves you £5,173 per year compared to taking everything as salary.
Over 5 years, that's £25,865 in your pocket instead of HMRC's.
Why the Optimal Mix Wins
Let's understand why £12,570 salary + dividends beats the alternatives:
1. Zero Tax on Salary
At £12,570 salary:
- Income Tax: £0 (covered by Personal Allowance)
- Employee NI: £0 (below £12,570 threshold)
- Only cost: £1,136 Employer NI
2. Lower Corporation Tax
By paying yourself salary first:
- Company profit reduces before CT calculation
- £12,570 + £1,136 = £13,706 comes out pre-CT
- CT calculated on smaller amount = lower tax bill
3. Lower Dividend Tax Than Equivalent Salary
On income above £12,570, compare:
- Salary: 20% Income Tax + 8% Employee NI + 15% Employer NI = 43%+ combined
- Dividends: 19-25% Corporation Tax + 8.75% Dividend Tax = ~26-32% combined (basic rate band)
Even in the higher rate band, dividends (CT + 33.75%) beat salary (40% + 2% + 15%).
4. State Pension Credits
At £12,570, you're above the Lower Earnings Limit (£6,500), so you get State Pension qualifying years included.
What Changes the Optimal Strategy?
Student Loans
If you have student loans, repayments apply to both salary and dividends.
Plan 1: 9% on income above £26,065 Plan 2: 9% on income above £28,470
With a Plan 2 loan, your optimal mix might include higher salary to reduce dividends in the repayment band—depending on whether you want to repay faster.
Scottish Taxpayers
Scotland has different Income Tax bands:
- Intermediate rate (21%): £27,492 - £43,662
- Higher rate (42%): £43,663 - £75,000
- Advanced rate (45%): £75,001 - £125,140
The dividend advantage is even larger for Scottish higher-rate taxpayers, making low salary + dividends more attractive.
Pension Contributions
If you want to make personal pension contributions:
- You need "relevant earnings" (salary) to claim tax relief
- At £12,570 salary, maximum personal contribution with relief = £12,570
For larger pension contributions, consider:
- Employer contributions: No relevant earnings limit, CT deductible
- Higher salary: Increases contribution ceiling
Mortgage Applications
If applying for a mortgage:
- Lenders prefer salary income
- May only count 50-60% of dividends
- Consider increasing salary 6-12 months before applying
Employment Allowance
If your company qualifies for Employment Allowance (£10,500 in 2025-26):
- Employer NI is effectively free up to this amount
- Higher salaries become more attractive
- Note: Single-director companies usually don't qualify
Practical Steps to Implement
1. Set Up Payroll
Even for £12,570/year salary:
- Register for PAYE with HMRC
- Use Basic PAYE Tools (free) or accounting software
- Submit monthly RTI reports
- Pay any PAYE/NI due by 22nd of following month
2. Document Dividends Properly
Each dividend payment needs:
- Board meeting minute (even if you're the only director)
- Dividend voucher with date, amount, shareholder details
- Entry in company accounts
3. Time Your Dividends
You can take dividends:
- Monthly, quarterly, or as needed
- Only from retained profits (check accounts first)
- Consider tax year timing for cash flow
4. Reserve Cash for Tax
Set aside from each dividend:
- ~13-20% for Dividend Tax (depending on your band)
- Self Assessment payment due 31 January
5. Use the Calculator
Don't rely on rough estimates. Use our Director Intelligence calculator with your exact numbers:
Running the Numbers for Different Profits
Here's how the savings scale at different profit levels:
| Profit | All Salary Take-Home | Optimal Mix Take-Home | Annual Savings |
|---|---|---|---|
| £50,000 | £35,293 | £39,440 | £4,147 |
| £75,000 | £48,761 | £54,370 | £5,609 |
| £100,000 | £61,370 | £66,543 | £5,173 |
| £125,000 | £72,109 | £78,717 | £6,608 |
| £150,000 | £81,262 | £90,890 | £9,628 |
The savings increase as your profit grows because more income falls into higher tax bands where the dividend advantage is greatest.
Tools & Calculators
Frequently Asked Questions
Can I take more than £100k out if I only have £100k profit?
No. You can only extract what the company has. With £100,000 profit:
- Maximum extraction (optimal) ≈ £80,000 gross
- The rest goes to tax (CT, NI, Dividend Tax)
If you take more than available profits as "dividends," it becomes a director's loan with tax consequences.
What about VAT?
VAT is separate from profit calculations. If you're VAT registered:
- Collect VAT on sales
- Pay it to HMRC
- It doesn't affect your personal take-home (unless you reclaim)
Your £100,000 profit figure should be after VAT has been accounted for.
Should I pay myself more to get higher mortgage?
Possibly. If you need mortgage approval:
- Increase salary 6-12 months before applying
- Lenders typically want 2-3 years of accounts
- Dividends are often discounted or ignored
- Calculate the trade-off (higher tax vs higher mortgage)
What if I have other income (rental, employment)?
Other income uses up your Personal Allowance and tax bands:
- If PA is already used, salary from day one is taxed
- You may already be in higher rate band
- The optimal salary level may change
Use our calculator with your specific situation
Is this legal?
100% legal. This is standard tax planning, not avoidance.
HMRC expects directors to:
- Choose between salary and dividends
- Optimize for tax efficiency
- Document everything properly
The rules are designed this way—dividends have lower tax rates because Corporation Tax has already been paid.
Key Takeaways
- £100,000 profit → £66,543 take-home with the optimal strategy
- Save £5,173/year vs taking everything as salary
- The optimal mix: £12,570 salary + remaining as dividends
- The principle: Avoid Employer NI (15%) and Employee NI (8%) where possible
- Document everything: Minutes, vouchers, proper accounting
Calculate Your Exact Numbers
Don't estimate—know exactly what you'll take home.
Our Director Intelligence calculator shows you:
- Side-by-side strategy comparison
- Exact tax breakdown for your profit level
- Your optimal salary and dividend amounts
- Impact of student loans, Scotland, other income
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