01/10/2026
“My friend pays themselves £12,570. Should I do that too?”
It’s a fair question. You will see that figure a lot when you look up director salaries.
It might work for you, but I would want you to answer a few things first:
• Have you got another job?
• Can your company claim Employment Allowance?
• How much do you need to take home each month?
The standard Personal Allowance is £12,570 for 2026/27, but you share it across your income. You don’t get a fresh allowance because you have opened a company.
If another job already uses it up, your company salary could be taxable.
Then there is the company’s side.
You might pay no personal Income Tax on your salary, while your company still has employer National Insurance to pay.
For a typical director for the full tax year, a £12,570 salary means £1,135.50 in employer NI before Employment Allowance.
Your friend’s company might qualify for that allowance and have enough left to cover it. Yours might not.
If you are the only director and the only employee liable for employer NI, your company cannot claim it.
But that doesn’t automatically mean you should reduce your salary to £5,000. Salary and employer NI can also reduce corporation tax, so we need to look at the overall calculation.
Then we would look at dividends.
For 2026/27, the dividend allowance is £500. Above your available allowances, the rates are 10.75%, 35.75% or 39.35%, depending on your tax band.
Other income could push you into a higher dividend tax band sooner than your friend.
You also need enough company profits available after allowing for corporation tax. Money in the bank doesn’t necessarily mean you can pay a dividend.
£12,570 could still be a sensible salary for you. I would just want to check your figures before saying, “Yes, do the same.”
Save this for your next chat with your accountant, especially if your circumstances have changed.
