How to pay yourself from a limited company

Salary

A small salary near the National Insurance Secondary Threshold builds state-pension credit and is a deductible company expense, usually without triggering employer NI.

Dividends

Dividends are paid from post-tax profits and taxed at lower rates than salary, after your dividend allowance. They must be supported by board minutes and vouchers, and only paid from distributable reserves.

Don’t forget pensions and expenses

Company pension contributions and legitimate expenses are efficient ways to extract value too. Your accountant sets the optimal mix each year.