Optimal Director Salary 2026/27: What to Expect
While official rates for 2026/27 haven't been announced, government policy provides strong indicators. Here's our early projection based on confirmed threshold freezes.
Important: These Are Projections
The 2026/27 thresholds have not been officially confirmed by HMRC. These projections are based on the government's announced policy to freeze thresholds until 2027/28. Official rates are typically confirmed in the Autumn Budget preceding the tax year.
Why We Can Project 2026/27
The government announced in Spring Budget 2024 that Income Tax and National Insurance thresholds would remain frozen until April 2028. This "fiscal drag" policy means we have reasonable confidence in the following projections:
- ✓Personal Allowance: Expected to remain at £12,570 (frozen since 2021/22)
- ✓Primary Threshold: Expected to remain at £12,570
- ✓Upper Earnings Limit: Expected to remain at £50,270
Projected vs Current Thresholds
| Threshold | 2025/26 | 2026/27 (Projected) | Change |
|---|---|---|---|
| Lower Earnings Limit | £6,500 | £6,500 | No change expected |
| Secondary Threshold | £5,000 | £5,000 | No change expected |
| Primary Threshold | £12,570 | £12,570 | No change expected |
| Upper Earnings Limit | £50,270 | £50,270 | No change expected |
| Employer NI Rate | 15.0% | 15.0% | No change expected |
Expected Optimal Salary for 2026/27
Projected Recommendation
Based on our projections, the optimal director salary for 2026/27 is likely to remain:
£6,500
Lower Earnings Limit
This assumes no Employment Allowance eligibility. Directors with EA may benefit from a higher salary up to £12,570.
What Could Change?
While threshold freezes are confirmed policy, the following could still change:
Autumn Budget 2025
The Chancellor could announce changes to NI rates or introduce new reliefs. Employment Allowance amounts could also be adjusted.
LEL Adjustments
The Lower Earnings Limit sometimes receives small inflation adjustments independent of the threshold freeze. This could marginally affect the optimal salary.
Policy Reversals
A change in government or economic circumstances could lead to early unfreezing of thresholds. However, this is considered unlikely before 2028.
Planning Ahead
If you're planning your company finances for 2026/27, you can reasonably assume:
- • Employer NI costs will remain similar to 2025/26
- • The £6,500 salary will continue to provide state pension credits
- • The salary + dividends strategy will remain optimal
- • Employment Allowance eligibility rules are unlikely to change
We'll update this guide when official 2026/27 rates are announced (expected Autumn 2025).
Sources
Disclaimer: This guide contains projections based on announced government policy. Official 2026/27 rates have not been confirmed. Please verify with HMRC or a qualified accountant before making financial decisions.