Navigating Director Pay: Salary, Dividends, and Tax Efficiency in Limited Companies

How do I pay myself as a director of a limited company?

It’s one of the most common things we’re asked and one of the most misunderstood. Unlike sole traders, directors don’t just take drawings. There’s a structure to follow, and when it’s done properly, it can be significantly more tax efficient.

Most directors are paid through a combination of:
 A salary (usually aligned with the personal allowance)
 Dividends from post-tax profits

But what many people don’t realise is how the tax actually flows:
 Salary goes through PAYE
 Employer National Insurance may apply
 Corporation Tax is paid first
 Dividends are taxed differently (and not subject to NIC)

When structured correctly, this can create a much lower effective tax rate than being self-employed. When structured incorrectly... it can create unnecessary tax or compliance issues.

In our latest blog, we break it down clearly and simply so you can understand:
 Why directors often take £12,570 salary
 How dividend tax works
 Why this structure is often more efficient
 When it stops being optimal
 Why personalised advice matters

If you’ve ever thought, “I think I understand how I pay myself...” this is worth a read.
https://infinity-accounting.co.uk/news/how-do-i-pay-myself-as-a-director-of-a-limited-company/
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