Optimal Director Salary 2026/27
The 2026/27 rates are now confirmed by HMRC. The Lower Earnings Limit rose from £6,500 to £6,708 (£129/week), and Personal Allowance, Primary Threshold and Upper Earnings Limit remain frozen until April 2031 following the Autumn Budget 2025.
2026/27 figures are confirmed
HMRC has published the 2026/27 rates and thresholds for employers. The LEL is £6,708. The Autumn Budget 2025 extended the freeze on Personal Allowance, Primary Threshold and Upper Earnings Limit through to April 2031. The Secondary Threshold stays at £5,000 until April 2028.
What's Confirmed for 2026/27
Following the Autumn Budget 2025, the main figures directors need for 2026/27 are set:
- ✓Personal Allowance: £12,570 — frozen until April 2031
- ✓Primary Threshold: £12,570 — frozen until April 2031
- ✓Upper Earnings Limit: £50,270 — frozen until April 2031
- ✓Lower Earnings Limit: £6,708 — up from £6,500 in 2025/26
2025/26 vs 2026/27 Thresholds
| Threshold | 2025/26 | 2026/27 | Change |
|---|---|---|---|
| Lower Earnings Limit | £6,500 | £6,708 | +£208 |
| Secondary Threshold | £5,000 | £5,000 | Frozen (to April 2028) |
| Primary Threshold | £12,570 | £12,570 | Frozen (to April 2031) |
| Upper Earnings Limit | £50,270 | £50,270 | Frozen (to April 2031) |
| Employer NI Rate | 15.0% | 15.0% | No change |
Optimal Salary for 2026/27
Recommendation
For 2026/27, the optimal director salary for most single-director companies is:
£6,708
Lower Earnings Limit (up from £6,500)
This assumes no Employment Allowance eligibility. Directors with EA may benefit from a higher salary up to £12,570.
What Autumn Budget 2025 Changed
The Autumn Budget 2025 confirmed the 2026/27 figures and extended the threshold freeze:
Freeze extended to April 2031
Personal Allowance, Primary Threshold and Upper Earnings Limit remain frozen for a further three years — until April 2031 — deepening the fiscal drag effect.
LEL rose to £6,708
The Lower Earnings Limit uprated with CPI from £6,500 to £6,708 (£129/week). This is the new floor for building a State Pension qualifying year at zero NI cost.
Dividend tax rose by 2ppt
Basic-rate dividend tax rose from 8.75% to 10.75% and higher-rate from 33.75% to 35.75% from 6 April 2026. Salary-at-Primary-Threshold strategies became relatively more attractive versus dividend top-ups.
Planning for 2026/27
For 2026/27 planning:
- • Employer NI rates are unchanged at 15% above £5,000
- • A £6,708 salary provides a State Pension qualifying year at zero NI
- • The salary + dividends strategy remains optimal, though the gap has narrowed
- • Employment Allowance eligibility rules are unchanged
Sources
Disclaimer: This guide reflects the confirmed 2026/27 rates published by HMRC and the Autumn Budget 2025 announcements. Please verify with HMRC or a qualified accountant before making financial decisions.