News and insights from the Verallo team
Dividend tax is rising in April 2026 – are you ready?
If you’re a company director or business owner, how you take money from your company is about to become more expensive.
Following the UK’s Autumn Budget 2025, dividend tax rates will rise from 6th April 2026 – increasing the cost of extracting profits through dividends.
What’s changing?
From 6th April 2026:
- Basic rate:75% → 10.75%
- Higher rate:75% → 35.75%
- Additional rate: unchanged at 39.35%
For many directors who rely on dividends, this means higher tax bills and lower take-home pay – at a time when income tax thresholds remain frozen and living costs are rising.
What does this mean in practice?
| Dividend Income | Tax Rate Now | Tax from April 2026 | Extra Tax |
|---|---|---|---|
| £10,000 | 8.75% | 10.75% | £200 more |
| £50,000 | 33.75% | 35.75% | £1,000 more |
| £75,000 | 33.75% | 35.75% | £1,500 more |
Even moderate dividends will cost more. Larger withdrawals could see a significant increase in personal tax.
Planning early could save thousands.
Why timing matters
Dividends declared and paid before 6th April 2026 will still be taxed at current lower rates.
This creates a limited planning window.
You may want to consider:
- Bringing forward dividend payments (where reserves allow)
- Reviewing the salary vs dividend balance
- Maximising ISAs and pension contributions
- Using spouse allowances and family planning strategies
Delaying could mean paying more tax than necessary.
Key considerations
- Cash flow first – Accelerating dividends must not compromise business stability.
- Tax timing – Bringing dividends into 2025/26 means the personal tax bill is due earlier – by 31st January 2027.
- Think bigger picture – Dividend strategy should sit within a wider financial plan covering pensions, allowances and long-term wealth protection.
Act Now – The clock is ticking
With changes effective from 6th April 2026, there is a clear opportunity to review your remuneration strategy before the 5th April deadline.
Verallo’s Chartered Tax Advisors can help you optimise your salary and dividend mix to remain fully tax efficient.
Next steps
We provide tailored advice to directors and shareholders, combining technical tax expertise with practical planning to maximise take-home pay and protect your business.