Director Salary and Dividends for Ecommerce Companies in 2026-27

For most owner-directors of an ecommerce company in 2026-27, the starting point is still a salary at or near the £12,570 personal allowance, with further income taken as dividends out of profits the company has already paid corporation tax on. Two things changed this year. Dividend tax rose by 2 percentage points from 6 April 2026, and the charge on an overdrawn director's loan account rose with it, to 35.75%. For a seller whose profit is tied up in stock, the order of decisions matters too: corporation tax first, then cash for stock and VAT, and only then what you can safely take out.

This article is part of our structuring and international expansion guide. It assumes you already trade through a limited company.

The 2026-27 Rates That Matter

The figures come from GOV.UK's rates and thresholds for employers for 2026 to 2027 and HMRC's guidance on dividends and corporation tax. The dividend increase was announced at the Autumn Budget on 26 November 2025.

Setting the Director's Salary

A salary of £12,570 uses your personal allowance and stays below the point where employee National Insurance starts. The company pays employer National Insurance at 15% on anything above £5,000, unless it can claim the Employment Allowance.

A company cannot claim the Employment Allowance when its only director is also its only employee paid above the £5,000 threshold. Many small ecommerce companies are in exactly that position. Once there is a second person on the payroll above the threshold, such as a part-time packer or customer service assistant, the company may be able to claim up to £10,500 a year.

This is an illustration that assumes you have no other income using the personal allowance. If the same £13,705.50 of profit were left in the company and paid out as a dividend instead, corporation tax would take £2,604.05 first, leaving £11,101.45 to distribute. Even after the employer National Insurance, the full salary leaves you better off in this example, but the margin is narrow and depends on your other income and the company's tax rate.

Directors' National Insurance is worked out on annual earnings rather than each pay period, so the timing of salary payments through the year does not change the total.

Dividends Only From Profits the Company Has Made

A company can only pay a dividend out of profits available for distribution, which means accumulated realised profits after losses, as section 830 of the Companies Act 2006 sets out. Cash in the bank is not the test. An Amazon or Shopify balance can include VAT you owe, corporation tax still to pay and money from sales that will be refunded.

GOV.UK's guidance on taking money out of a limited company says you must hold a directors' meeting and minute the dividend, even if you are the only director, and issue a voucher for each payment showing the date, the company name, the shareholder and the amount. Keep up-to-date management accounts so you can show the profits existed on the date the dividend was declared.

The 2026 rise costs a higher-rate taxpayer an extra £200 on every £10,000 of dividends above the allowance: £3,575 at 35.75% compared with £3,375 at 33.75% the year before. With corporation tax already paid on the same profit, it is worth planning the timing of larger dividends around your other income for the year.

Profit Tied Up in Stock

Stock you have bought but not sold at the year end is an asset, not an expense. A seller who spends most of the year's profit on inventory for the next peak still pays corporation tax on that profit, and the bill is due nine months and one day after the year end. That is often the moment cash is tightest.

• Work out the corporation tax estimate before the year end and set it aside, along with the next VAT payment.
• Decide what the business needs for stock and supplier deposits over the next three months before deciding on dividends.
• Take dividends from what is left, not from the gross bank balance.

Our 13-week ecommerce cash flow forecast shows how to plan those payments alongside platform payouts.

The Director's Loan Account and the 35.75% Charge

Money you take out that is not salary, a dividend or a repaid expense is a loan from the company. If the loan account is overdrawn at the year end and not repaid within nine months, the company pays a charge under section 455. For loans made on or after 6 April 2026 the rate is 35.75%, following the dividend upper rate, as HMRC's company taxation manual confirms. Some older GOV.UK pages still show 33.75%, which applies to earlier loans.

• The charge is repaid to the company once the loan is cleared, but only from nine months and one day after the end of the accounting period in which it was repaid.
• A loan over £10,000 at any point in the year is a taxable benefit unless you pay interest at HMRC's official rate, which is 3.75% for 2026-27.
• Declaring a dividend to clear the loan only works if the company has enough distributable profit at that date.

This is easy to trigger by accident when personal and business spending share a card or when platform payouts go to a personal account. Keep the two separate from the start.

Employer Pension Contributions

Contributions the company pays directly into your pension are not taxed as your income and carry no National Insurance. The company can normally deduct them for corporation tax as part of a reasonable pay package, relieved in the period they are paid. For a director who does not need all the profit now, this is often the most tax-efficient way to take value out of the business. Check your annual allowance before making large contributions.

If you want a salary and dividend plan set for your own figures, see our ecommerce tax and VAT service.

Questions Directors Ask About Paying Themselves

What are the dividend tax rates for 2026-27?

10.75% for basic rate taxpayers, 35.75% for higher rate and 39.35% for additional rate, after a £500 dividend allowance.

Can a sole director claim the Employment Allowance?

Not if the director is the only employee paid above the £5,000 secondary threshold. A second employee above that level can make the company eligible.

Can I pay a dividend if the company made a loss this year?

Only if there are enough profits left over from earlier years after the loss. The test is accumulated realised profits, not the current year on its own.

Why do I owe corporation tax when the cash went on stock?

Unsold stock at the year end counts as an asset rather than a cost, so the profit used to buy it is still taxable.