Optimal Director Salary 2026/27: £12,570 vs £5,000

The Autumn Budget introduced key reforms to UK Employer National Insurance Contributions (NICs). Effective April 2026, the Employer NIC rate rises to 15.0%, while the secondary threshold drops to £5,000 / year.

Key 2026/27 Director Salary Thresholds

1. £5,000 / year (£416.67 / month): The Employer NIC Secondary Threshold. Salaries up to £5,000 generate £0 Employer NICs.
2. £12,570 / year (£1,047.50 / month): The Personal Allowance & Employee Primary Threshold. Salaries at £12,570 utilize 100% of your Personal Allowance with £0 Employee NICs.

The HMRC Calculation Breakdown

For a Director drawing £12,570:

• Employer NIC: (£12,570 - £5,000) * 15.0% = £1,135.50
• Corporation Tax Relief: Salary (£12,570) + Employer NIC (£1,135.50) = £13,705.50 deductible from company profit.
• CT Tax Savings (19%): £13,705.50 * 19% = £2,604.05
• Net Advantage: CT Savings (£2,604.05) - Employer NIC (£1,135.50) = +£1,468.55 Net Benefit.

Drawing £12,570 remains the optimal strategy for single-director UK Limited Companies in 2026/27.