If you run your own limited company, you’ve probably asked:
“What’s the most tax-efficient salary to pay myself this year?”
Good news – we’ve got a clear and simple answer 🎯
🔮 Our Recommendation: £6,500 per year
For the 2025/26 tax year, we’re recommending most directors pay themselves £6,500 per annum – that’s about £541.67 per month.
Why this figure?
Because it hits the Lower Earnings Limit (so you still get a year towards your state pension), without triggering personal tax or employee NI contributions. Lovely stuff 😌
🤔 Why not take the full personal allowance (£12,570)?
Great question – and one we get asked a lot.
Here’s the comparison:
| Option | What You Save | What You Pay | Verdict |
| £6,500 Salary | Avoids personal tax & NI. Deductible vs corp tax profits | Tiny bit of employer’s NI | ✅ Easy, efficient, minimal fuss |
| £12,570 Salary | Fully uses your tax-free allowance. Deductible vs corp tax profits | Triggers ~£478 employer’s NI (no allowance if you’re the only employee) | 🤷 Not worth the hassle for most |
So unless your company is eligible for the Employment Allowance (you’ve got more than one employee on the payroll), the extra cost and admin from the £12,570 salary isn’t worth it for most directors.
🧾 NI thresholds for 2025/26
Here’s a quick breakdown of the key National Insurance levels for this year:
- Lower Earnings Limit (LEL): £6,500
- ✅ Hit this and you get your year counted towards your state pension
- Primary Threshold: £12,570
- 🚫 Go above this and you’ll start paying employee’s NI
- Secondary Threshold: £5,000
- ⚠ Go above this and your company pays employer’s NI (even if you don’t personally)
The £6,500 salary carefully threads the needle – giving you what you need, without much of an NI cashflow payment headache 💼
🧮 What about dividends?
Once you’ve paid yourself the £6,500 salary, the rest of your income can be taken as dividends.
That’s the usual combo:
💸 A small salary
➕
📈 Dividends from company profits
Dividends are taxed at lower rates than salary and don’t attract NI – so they’re the best way to top up your income in most cases.
⚖ Summary – What Should You Do?
👉Pay yourself £6,500 per annum salary through PAYE
👉 Top up with dividends when your company has profits
👉 Keep payroll simple and admin light
👉 Ask us if your situation is unique – we’ll tailor advice for you
As always, we make it dead simple 😉 Got questions? Get in touch and let’s make tax dead simple for your business! 🚀
