19/06/2026
Most construction directors take money out of their business the same way they did five years ago. Not because it's still the right way. Because no one's ever sat down and reviewed it. If you're turning over £2M or more and you haven't looked at how you pay yourself in the last year or two, there's a fair chance you're paying more tax than you need to.
The basics, in plain English. Most owner-directors run a low salary alongside dividend payments. The salary sits around the National Insurance threshold so you're not paying employer's NI unnecessarily. Dividends are drawn from post-tax profits and taxed at dividend rates, which are lower than income tax rates on salary. That's the standard approach, and it works, up to a point. But for a construction business where profit can swing year to year with contract flow, getting the mix wrong in a good year is an expensive mistake.
What often gets missed is the pension piece. If the company makes employer contributions directly into your pension, those contributions are an allowable business expense. They reduce your company's taxable profit. And unlike salary or dividends, they don't attract income tax or NI on the way in. So you're getting money out of the business, reducing your Corporation Tax bill, and building a pension pot in the same move. For a profitable construction business, that's worth planning properly, not discovering after year-end when it's too late to do anything about it.
The right salary and dividend mix depends on your personal circumstances, your spouse's income, what other income you have, and where the company's profit sits in a given year. There's no universal answer. But the planning conversation should happen before your year-end, not in the weeks after. When did you last review how you actually pay yourself?
