Dividend tax, basic rate band
10.75%
Every director taking dividends.
Kept current
Tax changes for limited companies
The rates, thresholds and deadlines that actually affect an owner managed limited company, in one place. Every figure below is checked against its GOV.UK source, and the date it was last checked is printed next to it. Where the published sources disagree, that is said rather than hidden.
Last reviewed 20 August 2026
The short version
For the 2026 to 2027 tax year, dividends are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band, with a £500 dividend allowance. Employer National Insurance is 15% above a £5,000 secondary threshold, with an Employment Allowance of £10,500 for eligible employers. Corporation tax is 19% up to £50,000 of profit and 25% above £250,000, with marginal relief in between. The VAT registration threshold is £90,000. Business Asset Disposal Relief is 18% on disposals from 6 April 2026, up from 14% the year before and 10% before that.
Two dates to diarise. From 1 April 2028 all company accounts must be filed using commercial software in iXBRL format, abridged accounts disappear, and small and micro companies will have to file a profit and loss account, though with an option to keep it off the public register. Making Tax Digital for Income Tax is already live for sole traders and landlords above £50,000, with lower bands following in 2027 and 2028.
Taking money out of your company
The dividend rates went up on 6 April 2026. If you have not looked at your salary and dividend split since then, it is worth doing, and the answer is different for a company with employees than for a single director company.
Dividend tax, higher rate band
35.75%
Most owner directors, once salary and dividends pass the higher rate threshold.
Dividend tax, additional rate band
39.35%
Directors with income above the additional rate threshold.
Dividend allowance
£500 a year
Everyone. It has not moved.
Corporation tax charge on an overdrawn director's loan (section 455)
33.75% of the amount outstanding
Any director who owes their company money nine months and one day after the accounting period end.
Worth knowing. Worth flagging honestly. The section 455 rate has historically tracked the higher dividend rate, and that rate rose to 35.75% on 6 April 2026, so you will find articles stating 35.75%. GOV.UK still published 33.75% when we checked on 20 August 2026. We would confirm the position for your specific accounting period rather than rely on either figure, and if you have an overdrawn loan approaching its deadline that confirmation is worth getting now.
Employing people
Employer National Insurance is the cost that catches owners out when they hire, because it sits on top of the salary and does not appear in the offer letter.
Employer (secondary) National Insurance
15%
Every employer, on earnings above the secondary threshold.
Secondary threshold (where employer NI starts)
£5,000 a year, or £417 a month, or £96 a week
Every employer, and it is the number that sets the efficient director salary.
Employment Allowance
£10,500
Eligible employers, which generally means you have at least one employee other than a sole director. This is the point most online guidance gets wrong for companies with staff.
National Living Wage, age 21 and over
£12.71 an hour
Anyone employing staff at or near the minimum.
Company profits and VAT
These have not changed recently, but they are the numbers people most often have slightly wrong, and the associated company rules quietly cost multi-company owners real money.
Corporation tax, small profits rate
19% on profits up to £50,000
Smaller companies, and the threshold is divided by the number of associated companies you have.
Corporation tax, main rate
25% on profits above £250,000
Larger companies. Between the two thresholds, marginal relief gives an effective rate on that band of around 26.5%.
VAT registration threshold
£90,000 of taxable turnover
Any business approaching it. The test is any rolling twelve month period, not your financial year, which is why growing businesses cross it without noticing.
Selling or passing on the business
The relief on selling a business has been reduced twice in two years. If your exit plan was built on the old numbers, the arithmetic has moved under it.
Business Asset Disposal Relief rate
18%
Anyone selling qualifying business assets. A sale that would have carried 10% tax two years ago now carries 18%, which on a £1m gain is £80,000 of difference.
Filing and administration
Two changes worth diarising. Neither affects your tax bill, and both will affect how you file.
Companies House accounts filing moves to software only
All accounts filed on or after 1 April 2028 must be filed using commercial software in iXBRL format
Every company. Companies House describes it as giving companies 21 months to prepare. If you currently file on paper or through the Companies House web service, that route closes.
Abridged accounts abolished, and small companies must file a profit and loss account
Small companies can no longer prepare and file abridged accounts. Small and micro entities must file a profit and loss account, but can opt out of having it published on the public register
Most owner managed companies. The opt out from publication is the part almost nobody is reporting, and it matters if you would rather your competitors could not read your margins.
Making Tax Digital for Income Tax, £50,000 band
Quarterly updates through compatible software
Sole traders and landlords with qualifying income above £50,000 in the 2024 to 2025 tax year. This is live now.
Making Tax Digital for Income Tax, £30,000 band
Quarterly updates through compatible software
Qualifying income above £30,000 in the 2025 to 2026 tax year.
Making Tax Digital for Income Tax, £20,000 band
Quarterly updates through compatible software
Qualifying income above £20,000 in the 2026 to 2027 tax year. Partnerships come later, with no date confirmed.
How this page is maintained
Rates change, and pages about rates go stale quietly. A page that was right in 2024 and has not been touched since looks exactly like a page that was right this morning, which is why so much of what you will find on this subject is wrong.
So every row here carries the source it came from and the date somebody at eba last opened that source and checked. If a row has not been re-checked, its date does not move. Where GOV.UK and the accountancy press disagree, as they currently do on the charge for an overdrawn director's loan, we say so instead of picking the more confident number.
- 20 August 2026Page created. Every figure checked against its GOV.UK source on this date. Added a caveat on the section 455 rate, where GOV.UK and the accountancy press currently disagree.
This page is general information, not advice for your situation. Rates and thresholds are divided, restricted or disapplied in circumstances this page does not cover, and the right answer usually turns on facts specific to you. If a figure here is going to inform a decision, ring us on 0333 358 0117 first.
Want this applied to your own numbers?
Knowing the rate is the easy part. Knowing what it means for your salary and dividend split, your group structure or your exit timing is the work.