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Dividend tax rises from 6 April 2026
Dividend tax went up by 2 percentage points for basic and higher rate taxpayers. Here's what it means for company directors.
From 6 April 2026 the tax rates on dividends changed for the 2026/27 tax year.
The new rates
- Basic rate: 10.75%
- Higher rate: 35.75%
- Additional rate: 39.35% (unchanged)
The dividend allowance stays at £500 — the first £500 of dividends is tax-free, but it still counts towards your tax bands.
What it means for directors
If you run a limited company and pay yourself mainly through dividends, your personal tax bill will be higher for the same income. The gap between running a limited company and being a sole trader has narrowed, so it's worth reviewing how you take money out of your business.
Try our salary vs dividends calculator to see the most tax-efficient mix for your profit — then talk to us and we'll plan it properly.
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