How can a company director pay themselves?

Last updated 3 October 2026 · General guidance, not legal or tax advice

A company director can take money out of a limited company in four main ways: a salary through payroll, dividends (if they are also a shareholder and the company has enough available profit), reimbursed business expenses, and loans from the company recorded in a director's loan account.

The company's money is not the director's money. Each method has its own rules and tax treatment, and the right mix depends on your personal circumstances.

Salary

A salary is paid because you work for the company as a director or employee. It goes through payroll, with Income Tax and National Insurance deducted where due, and the company may pay employer's National Insurance. Salary is usually an allowable expense for Corporation Tax. See does a director need payroll?.

Dividends

Dividends are paid to shareholders from the company's profits after Corporation Tax. Key rules:

They can only be paid from available profits (distributable reserves), including profits kept from earlier years.
They are paid to shareholders in proportion to their shares in each class.
Directors should declare them properly — usually with board minutes and a dividend voucher.
They are not a business expense for Corporation Tax.
Shareholders may pay dividend tax personally — see GOV.UK: tax on dividends.

Paying dividends when there are not enough profits can make them unlawful, and shareholders may have to repay them.

Expenses

The company can reimburse you for costs you pay personally that are wholly for the business, or pay them directly. Keep receipts. Some items, such as entertainment or mixed personal-and-business costs, have special rules, and certain benefits create tax charges.

Director's loan account

If you take money that is not salary, dividends or expense repayments, it is usually recorded as a loan in a director's loan account. If the account is overdrawn at the company's year end and not repaid within the required period, the company may have to pay extra tax, and there can be personal tax on loans above certain amounts. See GOV.UK: director's loans.

Comparing the options

Method	Needs payroll?	Corporation Tax deductible?	Key condition
Salary	Yes	Usually	Reported to HMRC each payday
Dividends	No	No	Enough available profits; paid to shareholders
Expenses	No	Usually, if wholly for business	Receipts and genuine business use
Director's loan	No	No	Recorded, and repaid or taxed as the rules require

Why bookkeeping matters here

Without up-to-date books you cannot tell whether there are enough profits for a dividend, or whether your loan account is overdrawn. Keeping records current is what makes taking money out safe. See what records to keep.

This guide explains the options, not what you personally should do. For advice on the right mix of salary and dividends for you, speak to an accountant.

In short

A company director can take money out of a limited company through a salary paid via payroll, dividends paid to shareholders, reimbursement of genuine business expenses, or loans recorded in a director's loan account. Salary is usually deductible for Corporation Tax and taxed through PAYE. Dividends can only be paid from available profits, must be properly declared, are not deductible and may be taxed personally. An overdrawn director's loan account at the year end can lead to extra company and personal tax if not repaid in time. The company's money is not the director's own, and the best mix depends on personal circumstances, so take accountancy advice.

Frequently asked questions

Can I take money whenever I want?

Not freely. Any money you take must be salary, a dividend, an expense repayment or a recorded loan, each with its own rules.

Do I pay tax on dividends?

Possibly, depending on how much you receive and your other income. Check the current allowance and rates on GOV.UK.

Sources and official guidance

This guide is general information about UK rules as at 3 October 2026. It is not legal, tax or financial advice.