How to pay yourself from a limited company
Once your company is set up, the money in its account belongs to the company, not to you. That's the starting point for how to pay yourself from a limited company. There are set routes, with paperwork for each. GOV.UK lists four: salary, expenses and benefits, dividends, and director's loans. This guide explains how each one works, with the 2026 to 2027 rates, so you can plan the mix with your accountant.
Not tax advice: the right mix of salary and dividends depends on your profits, other income and plans. We explain the rules from GOV.UK and HMRC. Ask a qualified accountant before you decide how to pay yourself from a limited company.
How to pay yourself from a limited company: the four routes
GOV.UK's guide to taking money out of a limited company sets out the options. Here's how to pay yourself from a limited company, route by route.
| Route | What it is | Key condition |
|---|---|---|
| Salary | Pay as an employee of your company | Company registered as an employer and running payroll |
| Dividends | A share of profit paid to shareholders | Only from available profits, with minutes and vouchers |
| Expenses and benefits | Repaying business costs you covered, or perks | Business costs only; some benefits are taxed |
| Director's loan | Money taken that isn't any of the above | Must be recorded; tax rules apply if not repaid |
Paying yourself a salary
Salary is the most familiar answer to how to pay yourself from a limited company. As a director, you can be an employee of your own company. GOV.UK says that if the company pays you a salary, expenses or benefits, "you must register the company as an employer". The company then runs payroll, deducts Income Tax and National Insurance from your pay, and pays them to HMRC along with any employer's National Insurance.
The figures that matter for 2026 to 2027 come from HMRC's rates and thresholds for employers, which GOV.UK says also apply to directors:
| Threshold | Annual amount | What happens there |
|---|---|---|
| Secondary threshold | £5,000 | Employer's National Insurance at 15% on pay above this |
| Lower earnings limit | £6,708 | Pay from here counts towards your National Insurance record |
| Personal allowance and primary threshold | £12,570 | Income Tax at 20% and employee National Insurance at 8% above this |
| Upper earnings limit | £50,270 | Employee National Insurance drops to 2% above this |
Two director-specific points affect how to pay yourself from a limited company through payroll. First, HMRC's CA44 guide says a person who is a director at the start of the tax year has an annual earnings period for National Insurance, rather than a weekly or monthly one. Second, the Employment Allowance (£10,500 for 2026 to 2027) cuts employer's National Insurance, but GOV.UK says a company with only one director can't claim it if that director is the only employee liable for employer's National Insurance.
A salary is a business cost for Corporation Tax. That's part of how to pay yourself from a limited company in a way that's easy to show: regular, through payroll, with payslips.
Paying yourself dividends
If you're a shareholder, the company can pay you dividends once it has made a profit. For many owners, dividends are a big part of how to pay yourself from a limited company. GOV.UK sets out the rules:
- Dividends can't exceed the company's available profits from current and previous financial years.
- They usually have to go to all shareholders, in line with their shares.
- Hold a directors' meeting to declare the dividend and keep minutes, even if you're the only director.
- Write a dividend voucher for each payment, give a copy to the recipient and keep one.
Dividends come out of profit after Corporation Tax, and they aren't a business cost. GOV.UK gives the main Corporation Tax rate as 25%, with a 19% small profits rate for profits of £50,000 or less, and marginal relief in between.
On your side, GOV.UK's tax on dividends page says you get a £500 dividend allowance each year. Above that, dividend tax for 2026 to 2027 is 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. You report dividends to HMRC if they go over your unused Personal Allowance and the dividend allowance.
How to pay yourself from a limited company with a mix
Many directors answer how to pay yourself from a limited company by combining a salary with dividends rather than choosing one. The reasons people commonly discuss with their accountants include:
National Insurance record
A salary at or above the lower earnings limit counts towards your record, which matters for some state benefits.
Tax on each route
Salary is taxed through payroll and reduces company profit. Dividends are paid from taxed profit and taxed at dividend rates.
Proof of income
Lenders, including mortgage lenders, may want payslips, dividend vouchers or accounts. Regular, documented pay is easier to show, whichever way you choose how to pay yourself from a limited company.
The right balance in how to pay yourself from a limited company depends on your profits, any other income, whether other people work in the company, and your plans. We won't suggest a number. How to pay yourself from a limited company tax-efficiently is exactly what an accountant is for, and the answer can change each tax year.
Expenses and benefits
Expenses are often forgotten when people ask how to pay yourself from a limited company. If you pay for a business cost personally, the company can repay you. It isn't income, so it isn't taxed, if it's a genuine business expense with a receipt. Using a company card from your business account for business costs avoids the need for repayments altogether.
Benefits work differently. GOV.UK says that if you use company assets personally, you report it as a benefit and pay any tax due. Ask your accountant before the company pays for anything you'll also use privately.
The director's loan account
Mistakes with how to pay yourself from a limited company usually show up here. Any money you take that isn't salary, a dividend or a repaid expense goes into your director's loan account. GOV.UK says the company must keep a record of it. Here's what happens if you owe the company money, from GOV.UK's director's loans guidance:
- 1
Repay within 9 months
If you repay within 9 months of the end of the company's Corporation Tax accounting period, there's no extra company tax.
- 2
Otherwise, extra Corporation Tax
The company pays 33.75% of the outstanding amount (32.5% for loans made before 6 April 2022). It can reclaim this once the loan is repaid, written off or released, but not the interest.
- 3
Over £10,000
If you're a director and shareholder, the loan is treated as a benefit in kind, the company deducts Class 1 National Insurance, and you report it on your Self Assessment return.
The Insolvency Service also warns that money in an overdrawn director's loan account still belongs to the company and must be repaid, even if the company becomes insolvent. A director's loan isn't a shortcut for how to pay yourself from a limited company; it's a short-term record that needs managing.
Making it work through your bank account
Your company needs its own separate business bank account, and good habits there make how to pay yourself from a limited company simpler. Pay salary on a set date through payroll. Transfer dividends only after they're declared and minuted, and reference them clearly. Never pay personal bills from the company account. If you're still learning how to pay yourself from a limited company, our sole trader or limited company guide covers the wider duties of directors.
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Questions for your accountant
- What salary level makes sense for me this tax year, given the thresholds?
- Should how to pay yourself from a limited company change for me this year?
- How much profit is available for dividends after Corporation Tax?
- Can the company claim the Employment Allowance?
- Is my director's loan account overdrawn, and how should I clear it?
- Do I need to register for VAT? Our guide on when to register for VAT covers the thresholds.
How to pay yourself from a limited company: FAQs
Can I just transfer money from the company to myself?
When it comes to how to pay yourself from a limited company, only as salary, a declared dividend or a repaid expense. Anything else goes into your director's loan account and must be recorded.
Do I need to run payroll to pay myself a salary?
Yes. GOV.UK says the company must register as an employer to pay a salary, expenses or benefits.
How much is the dividend allowance?
£500 a year, according to GOV.UK. Dividend tax for 2026 to 2027 is 10.75%, 35.75% or 39.35% depending on your tax band.
Can I pay dividends if the company made a loss?
Not beyond its available profits from current and previous years. GOV.UK says the company mustn't pay out more than that.
Who decides how to pay yourself from a limited company?
You do, as director and shareholder, within the rules. Most directors agree the approach with an accountant each year.
Sources
- GOV.UK: taking money out of a limited company (checked 25 October 2026)
- HMRC: rates and thresholds for employers 2026 to 2027 (checked 25 October 2026)
- GOV.UK: tax on dividends (checked 25 October 2026)
- GOV.UK: director's loans if you owe your company money (checked 25 October 2026)
- GOV.UK: Corporation Tax rates; Employment Allowance eligibility; HMRC CA44 National Insurance for company directors (2026 to 2027); Insolvency Service fact sheet on director's loan accounts (checked 25 October 2026)
- Tide pricing page for plan features (checked 25 October 2026)