Salary and dividends – what’s the difference?

As a company director, you may want to think about the most tax efficient way to pay yourself income from your business. You have the option to pay yourself a salary or pay yourself in dividends. But what difference does it make to your tax? Well, each type of income attracts a different rate of tax, which influences the amount of tax you are required to pay to HMRC. By considering how best to pay yourself and how much, you can save on the tax you end up paying.