AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Most owner-directors take a modest salary and the rest as dividends, because salary above the thresholds carries employer and employee National Insurance while dividends do not. For 2026 to 2027, the Personal Allowance is £12,570, employer NI is 15% above £5,000 a year, the dividend allowance is £500, and dividends above it are taxed at 10.75%, 35.75% or 39.35% depending on your band.
The building blocks for 2026 to 2027
| Item | 2026 to 2027 figure | Source |
|---|---|---|
| Personal Allowance | £12,570 | GOV.UK employer rates |
| Employee NI primary threshold | £12,570 a year (£242 a week) | GOV.UK employer rates |
| Employee NI rate | 8% to £50,270, 2% above | GOV.UK employer rates |
| Employer NI secondary threshold | £5,000 a year (£96 a week) | GOV.UK employer rates |
| Employer NI rate | 15% above the secondary threshold | GOV.UK employer rates |
| Lower earnings limit | £6,708 a year | GOV.UK employer rates |
| Employment Allowance | £10,500 (eligibility rules apply) | GOV.UK employer rates |
| Dividend allowance | £500 | GOV.UK tax on dividends |
| Dividend tax | 10.75% basic, 35.75% higher, 39.35% additional | GOV.UK tax on dividends |
| Basic rate band (England, Wales, NI) | 20% on the first £37,700 above the allowance | GOV.UK employer rates |
Scotland has its own income tax bands for salary; dividends use the UK rates.
How salary works
A salary is paid through payroll, with income tax and NI deducted. It is a cost to the company, so it reduces the company's taxable profit. A salary at or above the lower earnings limit (£6,708 for 2026 to 2027) usually counts towards your State Pension record. Between £6,708 and £12,570 you pay no employee NI, and up to £12,570 no income tax if you have no other income. Above £5,000 the company pays 15% employer NI, unless Employment Allowance covers it; check the GOV.UK eligibility rules for that allowance, as they depend on how many employees and directors are paid.
How dividends work
A dividend is a share of profit after Corporation Tax. It can only be paid if the company has enough profits available, and it must be properly declared and minuted. It carries no NI. You pay dividend tax only above your unused Personal Allowance and the £500 dividend allowance, and you report it through Self Assessment when it exceeds those.
Worked example: £30,000 extra
Example only, England, 2026 to 2027. Tolu is a sole director with no other income. She takes a £12,570 salary, so she uses her Personal Allowance and pays no income tax or employee NI on it. The company pays employer NI of 15% × (£12,570 − £5,000) = £1,135.50, unless Employment Allowance applies. She then wants another £30,000.
- As dividends: the first £500 is tax-free; the remaining £29,500 falls in the basic rate band, taxed at 10.75% = £3,171.25. No NI. She keeps £26,828.75.
- As extra salary: income tax 20% × £30,000 = £6,000; employee NI 8% × £30,000 = £2,400 (all of it sits between £12,570 and £50,270). She keeps £21,600. The company also pays employer NI of 15% × £30,000 = £4,500.
This comparison leaves out Corporation Tax. Salary and employer NI reduce the company's taxable profit, while dividends are paid from profit that has already borne Corporation Tax, so the true gap is narrower than the figures above suggest. An accountant will run both with your company's actual Corporation Tax position.
If your profits are higher
The basic rate band is the dividing line. In the example, salary of £12,570 plus dividends of £30,000 keeps Tolu's total income at £42,570, inside the band that ends at £50,270. Dividends above that point are taxed at 35.75%, and once total income passes £100,000 the Personal Allowance starts to taper away. Many directors therefore plan dividends around the band each year, sometimes leaving profit in the company rather than taking it all.
Timing matters too. Dividends are taxed in the tax year they are paid, so a dividend declared on 4 April falls into a different year from one declared on 6 April. Spread payments if one year would otherwise push you into a higher band.
Points for directors with links to Nigeria
- Visa conditions. If you are on a sponsored or time-limited visa, how you are paid can matter for the visa; see running your own company on a Skilled Worker visa.
- If you move to Nigeria. Where you are tax resident changes who taxes your salary and dividends; see UK director living in Nigeria: tax on salary and dividends.
- Paying family. Salary to a relative must reflect real work; see employing a family member.
- Drawings are not pay. Money taken without salary or a declared dividend goes to the director's loan account; see director's loan account basics.
What to check first
- Does the company have profits available for dividends this year?
- What other income do you have? It uses up your allowance and bands first.
- Do you qualify for Employment Allowance?
- Is payroll set up so salary is reported on time?
Where Pryme fits
Pryme Business Accounts include payroll and a Finance agent that prepares dividend paperwork and payment runs for a director to approve; nothing moves until you do.
Questions people ask
What is the most tax-efficient salary for a director in 2026/27?
Many directors take a salary around the £12,570 Personal Allowance and primary threshold, because it uses the allowance without employee NI. Employer NI applies above £5,000 unless Employment Allowance covers it.
How much are dividends taxed in 2026 to 2027?
After the £500 dividend allowance, GOV.UK lists 10.75% at basic rate, 35.75% at higher rate and 39.35% at additional rate.
Do dividends count for National Insurance?
No. Dividends carry no National Insurance, which is the main reason directors mix salary and dividends.
Can I pay myself dividends if my company made a loss?
Dividends can only be paid from profits available for distribution. Without them, money taken is likely to be a director's loan.
Sources
- GOV.UK: Rates and thresholds for employers 2026 to 2027 (updated 1 Sep 2026) · accessed Oct 2026
- GOV.UK: Tax on dividends (updated 30 Sep 2026) · accessed Oct 2026
- GOV.UK: Income Tax rates and Personal Allowances · accessed Oct 2026
- GOV.UK: National Insurance rates and categories · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.