Tag: Dividends
Salary, dividends or both: how should I pay myself from my company?
For most one-person companies the answer in 2026/27 is a small salary plus dividends. A salary of £12,570 uses your tax-free Personal Allowance, and dividends above it are taxed at 10.75% in the basic band, lower than the 20% Income Tax plus 8% National Insurance on salary. On £60,000 of company profit the mix saves roughly £4,500 a year against taking it all as salary. Dividends can only come from profits after Corporation Tax. Cited to GOV.UK, checked 20 October 2026.
What are the dividend tax rates and allowance for 2026/27?
The dividend allowance is £500. Above it, dividends are taxed at 10.75% in the basic rate band, 35.75% in the higher band and 39.35% in the additional band. The basic and higher rates rose by 2 percentage points on 6 April 2026. Dividends inside an ISA are not taxed at all. Cited to GOV.UK, checked 20 October 2026.