Five Tax-Efficient Ways to Pay Yourself as aDirector in 2025

If you’re the director of a limited company, deciding how to pay yourself can make a big
difference to your personal income and tax liabilities. In 2025, there are still several
strategies available to keep more of your income and stay compliant.
💼 1. Low Salary, High Dividend
This is the most common method for small company directors:
● Pay yourself a salary up to the National Insurance threshold (typically £12,570).
● Top up with dividends, which are taxed at lower rates than salary income.
2025 Dividend Tax Rates:
● £0–£500 (allowance): 0%
● Basic rate: 8.75%
● Higher rate: 33.75%
● Additional rate: 39.35%
👉 This method keeps PAYE and NI costs low while using your tax allowances efficiently.
🏡 2. Use of Home as Office
If you regularly work from home, you can claim business use of home expenses:
● Simplified flat-rate method (e.g., £6/week)
● Or actual proportion of home expenses like rent, electricity, and internet
💳 3. Claiming Business Expenses
Many directors forget to claim:
● Mileage at HMRC-approved rates (45p/mile for first 10,000 miles)
● Mobile phone (if in company name)
● Professional subscriptions
● Working from home costs
These reduce your profit—and your tax bill—without affecting your take-home.
🏦 4. Pension Contributions
Your company can pay into your director’s pension as an allowable expense:
● No National Insurance due
● Reduces Corporation Tax
● Annual pension allowance is up to £60,000 in 2025
📊 5. Bonus or Benefits in Kind
In some cases, a one-off bonus or perks like a company car, private healthcare, or
mobile phone might be tax-efficient—if structured correctly.
🎯 At Bolton Accounting Consultants, we tailor your remuneration strategy based on your
profits, goals, and tax band. Book a free consultation and make 2025 your most tax-efficient
year yet.