You're doing £4m and you're still paying yourself like you're doing £400k. Salary at the personal allowance, dividends on top, the rest left in the business. And that's mostly fine, until the year end when the accountant mentions your director's loan account, or the investor asks what the share structure looks like, or someone says the word EMI and you realise you don't know what it stands for.
Founder finance feels like a problem for later. Later arrives at £3m, usually as a tax bill you didn't expect or an option scheme you can't grant because the structure was never set up.
As a specialist social commerce accountant, I spend my days inside the books of UK brands scaling from £1m to £20m. The same three gaps show up every time: how the founder is paid, how the shares are held, and whether anyone has looked at the reliefs that actually apply. Here's the current state of each, with the 2026 numbers most advice online hasn't caught up with.
Paying Yourself: The Numbers Changed in April
Start with the boring engine room: salary versus dividends. Most founders run on a rule of thumb, and it's still right. But the rates underneath moved on 6 April 2026, and a lot of the advice floating around quotes last year's figures.
The dividend rates went up two points for 2026/27, confirmed on the government's own rates page: 10.75% in the basic rate band, 35.75% in the higher rate band, and the dividend allowance is just £500. Last year it was 8.75% and 33.75%. Same dividend, more tax.
The income tax bands haven't moved: personal allowance £12,570, basic rate to £50,270, then 40%, then 45% above £125,140. National Insurance hasn't either: employees pay 8% above £242 a week, and the company pays 15% employer NI above £5,000 a year per employee. That employer NI is the quiet killer of the all-salary approach.
Here's £50,000 out of the company three ways in 2026/27, assuming no other income:
| How you draw £50,000 | Tax and NI | What you keep | Cost to the company |
|---|---|---|---|
| All salary | £7,486 income tax, £2,993 employee NI, £6,750 employer NI | £39,521 | £56,750 |
| £12,570 salary, rest dividends | £0 income tax on salary, £1,136 employer NI, £3,970 dividend tax | £46,030 | £51,136 |
| All dividends | £3,970 dividend tax | £46,030 | £50,000 |
Salary up to the personal allowance, dividends above it, still wins. The £12,570 salary sits just under the employee National Insurance threshold, so it costs you almost nothing to run. But notice what the all-dividend route does: it lands in the same place, because the personal allowance applies to dividend income too. The gap that matters is between any dividend route and taking everything as salary: £6,509 a year in your pocket on the same £50,000. Scale that to £150,000 of drawings and the difference is five figures. The moment your total income crosses £50,270, dividends above that line are taxed at 35.75%, which is where founders start asking about structure. They're right to.
Share Structure: Alphabet Shares, In Plain English
Ordinary shares all carry the same rights, which is fine with one founder. It breaks at scale, usually in one of three ways: you want to pay your spouse or co-founder a different dividend rate, you want to give a key hire equity without voting control, or an investor wants a different economic return.
The answer is alphabet shares: separate classes of ordinary shares with different dividend rights, usually identical in every other way. A shares for you, B shares for your co-founder, C shares for the investor, D shares held in trust for the team. Same company, same voting if you draft it that way, different dividend taps. Done properly, they're a tax planning tool: dividends can be directed to whoever is in the lowest tax band, which is worth real money when the higher rate on dividends is 35.75%. Within the rules: settlements legislation and employment-related securities rules stop alphabet shares being a simple income-splitting device, so take advice before using them that way. Done badly, they're a headache at Companies House and a valuation problem at sale. Get the paperwork right the first time, because retrofitting share classes after investors arrive is expensive.
EMI: The Rule Change Most Founders Missed
Here's the one that genuinely changed in 2026. Enterprise Management Incentives are the UK's tax-advantaged share option scheme: grant options at market value, and your team pays no income tax or National Insurance at exercise, only capital gains tax at sale. For years the scheme was capped at £30m of gross assets, which sounds generous until you add stock, debtors and a warehouse. Plenty of £10m brands were locked out.
From 6 April 2026 the limits jumped, confirmed by HMRC's own policy paper. Options over shares worth up to £6m, up from £3m. Gross assets up to £120m, up from £30m. Up to 500 employees, up from 250. Exercise period up to 15 years, up from 10, and existing unexercised grants can be extended without losing the tax advantages.
Read that again. If your brand is doing £5m, £10m, even £15m, you probably qualify now when you didn't before April. Those limits don't guarantee eligibility: the company, trade, employee and option conditions all still apply, so check before you rely on it. The individual limit is still £250,000 of options per employee. And the exit maths is good: for qualifying EMI options the two-year clock for Business Asset Disposal Relief runs from grant, and gains qualify at 18% from 6 April 2026, up to £1m of lifetime gains per person.
EMI is how scaling brands keep their best people without paying cash they can't afford. The catch: options must be granted at market value, so do the valuation before the next funding round.
R&D Claims: The Brutal Truth for DTC Brands
Every e commerce founder I meet has been pitched an R&D claim. Most of them shouldn't have one. R&D relief is for advances in science or technology, not for building a Shopify store, connecting TikTok Shop to your inventory system, or testing ad creatives. That's development, not research, and HMRC audits the claims it's suspicious of.
What can genuinely qualify in a DTC business: novel software you wrote that solved a real technical uncertainty, warehouse automation, supply chain technology that didn't exist off the shelf. If a competent professional couldn't have known whether it would work, it might be R&D. If you bought a platform and configured it, it isn't.
The rates, current for 2026: the merged R&D expenditure credit gives a 20% taxable credit on qualifying spend. If you're a loss-making SME with qualifying R&D spend of at least 30% of total expenditure, enhanced R&D intensive support gives a 186% deduction plus a payable credit up to 14.5% of the surrenderable loss, roughly 27p cash back per £1 of qualifying spend. That's the scheme the claim-mills sell hardest, and the one HMRC scrutinises hardest.
Two practical rules if you do claim. Claims need an additional information form filed with the corporation tax return, and you have two years from the last day of the period of account to claim (for periods of 18 months or less). And watch the PAYE cap: credits are capped at £20,000 plus 300% of your PAYE and National Insurance liabilities, so a small payroll limits a big claim. Claim properly, with the technical narrative written before the year end, not reconstructed after it.
The Directors' Loan Trap
One more thing shows up in every set of accounts I see from a fast-growing brand: the director's loan account. You draw £30,000 in July because cash was tight, then £40,000 more in December, and suddenly you owe the company £70,000.
Here's what that costs in 2026/27. Loans to participators, the s455 charge, now runs at 35.75%, because the rate mirrors the dividend upper rate, which went up in April. That's £25,025 of tax on a £70,000 balance, due with the corporation tax. It's refunded if you repay within nine months and one day of the year end, but the cash has to come back, and the tax is due first.
I've seen the s455 charge wipe out a quarter of a year's profit more times than I can count. The fix is boring: agree your drawings in advance, run them as a declared dividend, and never let the loan account drift past the year end. If it has drifted, sort it before the year end, not after the accountant's email.
Frequently Asked Questions
Should I pay myself salary or dividends at £5m?
Salary up to the personal allowance, dividends above it, still works, but only if you stay inside the basic rate band. Once your drawings push you past £50,270 of total income, dividends get taxed at 35.75% and structure starts to matter: alphabet shares, a spouse in a lower band, or a pension contribution instead of a dividend. We covered the wider sign-off point in You've Outgrown Your Accountant.
What are alphabet shares and do I need them?
Separate classes of shares with different dividend rights, so different people can be paid different amounts from the same company. You need them when you want to split dividends unevenly, reward a hire with equity without control, or take investment. Set them up properly, with rights drafted into the articles, before investors arrive.
Can my brand use EMI now?
Almost certainly, if you're under £120m of gross assets and under 500 employees. The limits jumped on 6 April 2026, so brands that were locked out are now in. Per employee it's £250,000 of options, and you need a market value valuation at grant.
Does my ecommerce software spend qualify for R&D tax relief?
Usually not. Building a store, integrating marketplaces and testing ads is not R&D. Genuinely novel software or technology that solved a real technical uncertainty can be. If a claim sounds too easy, it's probably the claim-mill talking, not HMRC's rules.
What happens if I owe my company money?
The s455 charge applies: 35.75% of the balance, paid by the company, refundable if you repay within nine months and one day of the year end. A £70,000 balance costs £25,025 in tax up front. Declare dividends instead of drifting a loan.
Should I set up a holding company?
Maybe, but not for tax reasons alone. They earn their keep with multiple trading businesses, property, or investors who want clean separation. For a single-brand operator, the complexity usually isn't worth it yet.
Summary: Sort the Structure Before You Need It
Founder finance is the least glamorous part of scaling and the most expensive to get wrong. The dividend rates moved in April and most advice hasn't. The EMI limits jumped in April and most advisors haven't noticed. The s455 charge is now 35.75% and most founders find out at year end.
None of this is complicated once it's set up. Salary to the allowance, dividends from the right share class, an EMI scheme before the funding round, an honest look at whether R&D applies, and a loan account that's never in the red at year end. That's a founder finance system, and it's cheaper than the mistakes.
If you're doing £1m to £20m across TikTok Shop, Amazon or Shopify and you want your personal tax and share structure checked against the 2026 rules, that's the conversation we have every day. Book a call and we'll look at your actual numbers. Run them through our free tools first if you like, see how we help TikTok Shop sellers, and read what we actually do for e commerce brands on our case studies page.