If you’re a company director/shareholder, then dividend tax is about to get more expensive 🫣
From 6th April 2026, dividend tax rates are increasing by 2%.
That means dividends will be taxed at:
10.75% basic rate (currently 8.75%)
35.75% higher rate (currently 33.75%)
41.35% additional rate (currently 39.35%)
So if you normally take dividends from your company, it’s worth checking before 5th April whether taking some extra dividends this year could save tax in the long run.
But here’s something many directors/shareholders don’t realise…
You don’t actually have to physically take the money out of the company bank account before the tax year ends.
Dividends can be declared (or “voted”) before 5th April and taken later.
The dividend is simply credited to your director’s loan account, meaning:
✅ It counts as a dividend for this tax year
✅ But the cash can be withdrawn later
This can be useful if you want to:
→ save tax but
→ leave cash in the company for now
❗️ BUT (and this is important) ❗️
Dividends can only be paid from profits after corporation tax.
In simple terms:
No profits = No legal dividend
Directors/shareholders should always check that there are sufficient retained profits in the company before declaring dividends.
A quick review before the tax year ends can sometimes mean paying less tax overall.
But like most tax planning…
It works best before 5th April, not after it.
To make this easier, we’ve created a simple Dividend Planner.
It shows you:
✔️ Estimated corporation tax
✔️ The tax pot to set aside
✔️ A sensible dividend range
✔️ A safety warning if cash is getting tight
PLEASE NOTE THIS IS NOT TO BE CONSTITUTED AS TAX PLANNING ADVICE.
If in doubt, please contact us to confirm your position.