Prepare your remuneration for 2026
October 2025 - From 2026, the tax rules for business owners will change. If you want your company to continue to benefit from the reduced corporate tax rate – 20% instead of 25% on the first €100,000 of profits – your remuneration must meet stricter conditions.
Those who do nothing will quickly end up paying thousands of pounds in additional tax and missing out on smart optimisation opportunities for their pensions.
How much should you pay yourself?
The government has set a clear limit from 2026 onwards: you must pay yourself an annual salary of at least £50,000 (amount to be indexed annually). If your company's profits are lower than this, a salary equal to those profits is sufficient.
In addition, the value of your benefits in kind – for example, your company car or smartphone – must not exceed 20% of your annual salary. If it is higher, you lose the reduced tax rate.
A concrete example
Let's assume that you currently receive a salary of £40,000 and have a company car with a flat-rate value of £12,000. Benefits of all kinds therefore represent nearly 30% of your salary. In this case, not only do you not benefit from the reduced rate, but you also risk paying an additional £5,000 in corporation tax.
How can you remedy this? You have several options:
You increase your salary to at least €50,000, which restores the salary-benefit ratio.
You can buy back (part of) the benefits by paying a sum to the company.
You choose to accept the penalty, but compensate by taking less salary and more dividends.
The most advantageous approach for you depends on your personal situation. Your accountant can help you calculate this accurately.
Why it is better to move up a gear quickly
Waiting until the end of 2026 is not a good idea. For some measures, this is still possible, such as the buy-back of all types of benefits. But it's a different story for a salary increase: the sooner you implement it, the more you earn. This has everything to do with your pension through group insurance or an individual pension plan (IPT). The premiums paid by your company for this purpose are only tax-deductible if they are based on a salary that you receive regularly. This means that a one-off salary increase in December is not taken into account. You therefore miss out on the opportunity to maximise your supplementary pension for tax purposes.
The message is clear: this year, check with your accountant to see if your salary package is still adequate. Perhaps a minor adjustment will suffice, or perhaps a more significant overhaul will be necessary.
