Maximise UK Ltd owners' income
Tax Shrink minimises the overall tax burden for the owner of a small Limited company in the UK. Uniquely, it calculates the optimal salary and dividend split for Limited companies in the UK taking into account major interdependencies.
Important
The examples and interactive calculators are provided as is and without warranty. They have not been built by tax professionals. They do not cover all tax rules and situations and do not replace professional advice. Consequently, always consult a qualified tax professional and do not rely on this website's information.
Below are some purely illustrative examples.
£10,000 revenue1
The savings could amount to £1,790.86 or 22.11% above the minimum, or £8,100.00 vs £9,890.86 net income.
The worst option is to convert all the revenue into profit, which attracts corporation tax, before taking it out as a dividend.
The optimal solution is to take it all as a salary assuming there are no other incomes. Then there is no corporation tax, no dividend tax, no income tax, no employer national insurance, and no employee national insurance.
£100,000 revenue1
The saving could be £6,062.10, 9.96% above the minimum, or £60,844.55 vs £66,906.65 net income.
In this case the worst option is to take it all as a salary. It attracts income tax, employee and employer national insurance with both income and empoyee national insurance pushing into the higher rates.
The optimal solution is to take a salary up to the personal allowance and the rest as a dividend. This takes advantage of the personal allowance, the dividend allowance, corporation tax relief, and uses the lower combined corporation tax and dividend tax rates compared to income tax and NI rates.
£1,000,000 revenue1
The saving could be £11,130.59, 2.38% above the minimum, or £467,320.80 vs £478,451.39 net income.
The worst option is to take it a salary of £50,270 and the rest as a dividend.
The optimal solution is to take £835,901.00 as a salary and the rest as a dividend. This has two upsides. Firstly, the majority of the salary benefits from the lower upper employee national insurance rate of only 2%. Secondly, the company can claim full corporation tax relief.
