Last reviewed: November 2026
The tax-free dividend allowance is £500 for 2026/27, and dividend tax rates for basic and higher rate taxpayers went up by 2 percentage points on 6 April 2026. If you take dividends from your own limited company, your tax bill for this year will be higher than last year on the same income.
| Band | 2025/26 | 2026/27 |
|---|---|---|
| Dividend allowance | £500 | £500 |
| Basic rate | 8.75% | 10.75% |
| Higher rate | 33.75% | 35.75% |
| Additional rate | 39.35% | 39.35% |
These rates apply across the whole UK, including Scotland. Scottish income tax rates do not apply to dividends.
What it means for a typical director
A director who takes a £12,570 salary and £40,000 in dividends pays about £4,821 in dividend tax for 2026/27, compared with £4,031 for 2025/26: around £790 more for the same income.
Ways to reduce the impact
- Use your spouse or partner’s allowance and bands, if they genuinely own shares in the company (see our article on alphabet shares).
- Make employer pension contributions from the company. These are usually deductible for corporation tax and carry no dividend tax.
- Plan the timing of dividends across tax years, especially if your income varies.
- Hold investments in an ISA, where dividends are tax-free.
Every director’s position is different, so the right mix of salary, dividends and pension depends on your figures. Ozvite sa nám and we’ll work out the most tax-efficient way for you to take money from your company this year.
The example assumes no other income and the standard £12,570 personal allowance. Sources: TinyTax 2026/27 rates; Deloitte UK tax rates 2026/27.