Paying Yourself In The 2025/26 Tax Year From a UK Limited Company

Introduction

When running a limited company, every penny counts, so understanding how to efficiently pay yourself is key. 

Let's explore the most tax-efficient methods for company directors to pay themselves. 

The basics

There are broadly three main options when it comes to paying yourself as a director of a limited company, salary, dividends and reimbursing yourself for expenses.

For tax efficiency, most company directors will choose to pay themselves a low salary and take any further money from the company in the form of dividends. This is because dividends are taxed at a lower rate than salary, and avoid national insurance contributions. 

Any expenses can then be repaid by the company free from tax and national insurance. For maximum tax efficiency you may also want to consider maximising company benefits and pension contributions.

Let's dive in to show you how it works. 

Paying yourself a salary (PAYE)

A salary is what you pay yourself through payroll as is subject to PAYE tax. As salaries are tax deductible they help to lower the company's taxable profit, and therefore the tax the company pays. 

For tax efficiency you'll want to pay yourself below the personal tax allowance of £12,570, as any salary you earn over £12,570 is then taxed at the following Income Tax rates. 

Tax Bands