Home / Dividend tax has gone up: what it means for directors
Dividend tax has gone up: what it means for directors
From 6 April 2026, the two lower dividend tax rates went up by 2 percentage points.
The new rates
| Tax band | 2025/26 | 2026/27 |
|---|---|---|
| Basic rate | 8.75% | 10.75% |
| Higher rate | 33.75% | 35.75% |
| Additional rate | 39.35% | 39.35% |
The first £500 of dividends each year is still tax-free. The rates were announced in the Budget on 26 November 2025, and the Budget on 28 October 2026 didn’t change them.
What it means for you
If you pay yourself mainly in dividends, you keep a little less of each pound. For a director taking £30,000 of dividends within the basic rate band, the rise is about £590 a year.
The usual mix still often works best: a salary up to the personal allowance, then dividends. But the gap has narrowed, and for some directors a higher salary or pension contributions from the company now come out ahead.
Coming in April 2028
The Budget on 28 October 2026 said the rules on how payouts from companies are taxed will be modernised from April 2028, with family successions protected. Draft rules come first, and we’ll update this page when they’re published.
See your own best split, and the difference from last year.
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