Salary versus Dividends

& Other Tax Efficient Profit Extraction Strategies

by Carl Bayley & Nick Braun

Salary versus Dividends is essential reading for ALL company owners and directors.

Written in plain English with dozens of examples, this unique guide shows you how to save thousands of pounds in tax every year by choosing the best mix of salary and dividends for YOU.

The latest edition has just been published (August 2025) and is completely up to date.

Breaking News! This guide has been revised significantly following the recent changes to national insurance. Despite the increase in NI rates, the more than doubling of the employment allowance means it is now better for many more company owners to pay themselves a substantially bigger salary.

The guide also shows you how to reduce your tax bill further by paying yourself rental income or interest income and using director's loans, company pension contributions and other profit extraction strategies.

What Information is Contained in the Guide?

Subjects covered include:

• A plain English guide to how companies and company owners are taxed.
• How to choose the best mix of salary and dividends for YOU.
• How that mix is affected when you have other income from outside the company (e.g. rental income).
• Why some older directors can enjoy a salary of up to £75,000 free from national insurance.
• How your company can enjoy more tax relief (26.5% instead of 19%) by paying bonuses after its tax year has ended.
• When it pays to take most of your income as salary, following the recent national insurance changes:
• Companies with a single director, with all or most of the £10,500 employment allowance available
• Directors seeking to grow the company and prepared to restrict their own income in the short term
• Older and younger directors
• High income earners
• How single director companies can secure the £10,500 employment allowance and save thousands.
• How to avoid the 33.75% higher rate on dividends and the 56.25% rate (income over £100,000).
• How couples can extract £100,540 this year with a total tax bill of just £6,510.
• How one company owner saves £16,996 in tax with roller-coaster income: varying dividends from year to year.
• How to reduce your payments on account by postponing dividends even just days.
• How to pay tax-free salaries to family members (including minor children).
• How splitting your income with your spouse/partner could save over £11,000 annually!
• Several chapters of vital tax planning ideas for high income earners and additional-rate taxpayers.
• How more company owners can protect their child benefit following recent changes.
• Fully updated information on the best alternative profit extraction techniques, including:
• Loans to directors - In one example a director saves over £37,000 by taking a loan from their company instead of dividends
• Rental income - More tax efficient than salaries or dividends in many cases
• Interest income - How company owners can pay themselves up to £6,000 tax-free every year
• Pension contributions - You could end up paying just 15% tax compared with 51% overall on dividends
• Charitable donations - How to benefit your favourite charity by more than £3 for every £1 you give
• Capital Gains - Everything you need to know about Business Asset Disposal Relief
• How to declare dividends properly.
• Avoiding higher-risk tax planning strategies (dividend waivers, alphabet shares etc).
• How to save up to £2,262 in CGT by altering your dividends when you sell assets like property.

Click here to read the full contents listing and first section of the book