Dividend tax planning for 2026 is more important than ever for UK company directors. With the 2026/27 tax year now underway, several key thresholds have been frozen and dividend tax rates have increased — meaning that getting your planning right could save you a significant amount. At ProKeeper, we work with company directors across the UK to structure their income in the most tax-efficient way possible. Here’s what you need to know for 2026/27.
Table of Contents
- Key Tax Thresholds for 2026/27
- Dividend Tax Changes for 2026/27
- Recommended Salary & Dividend Strategy
- Employment Allowance Eligibility
- Get a Personalised Tax Planning Review
Key Tax Thresholds for 2026/27
The following thresholds apply for the 2026/27 tax year:
- Personal Allowance (tax-free income): £12,570
- Employee NIC threshold: £12,570
- Employer NIC threshold: £5,000
- Higher Rate Tax threshold: £50,270
- Dividend Allowance: £500
All of these thresholds are frozen until April 2028, which means more directors will be drawn into higher tax bands each year — a process known as fiscal drag. Proper dividend tax planning for 2026 can help you stay ahead of this.
Dividend Tax Planning 2026: Key Rate Changes
The 2026/27 tax year has brought significant changes to dividend tax rates. From 6th April 2026, the new rates are:
- Basic Rate: 10.75% (up from 8.75%)
- Higher Rate: 35.75% (up from 33.75%)
- Additional Rate: 39.35% (unchanged)
The tax-free dividend allowance remains at just £500 — a long way from the £5,000 directors could rely on a decade ago. These increases make careful dividend tax planning for 2026 essential, as even modest dividend income is now more expensive. The 2% increase in basic and higher rate dividend tax means that even modest dividend income is now more expensive.
Recommended Salary & Dividend Strategy for 2026/27
The optimal approach to dividend tax planning for 2026 depends on whether your company qualifies for Employment Allowance. The following assumes no other personal income during the tax year:
If Your Company Does NOT Qualify for Employment Allowance
- Salary: £12,570
- Dividends: £37,700
This keeps total income just below the higher rate threshold, avoiding the 35.75% dividend rate entirely. The salary sits at the personal allowance level, below the employer NIC secondary threshold, so no employer NICs are triggered.
If Your Company IS Eligible for Employment Allowance (unused on staff)
- Salary: £50,270
- Dividends: £500
Where Employment Allowance is available and unused, drawing a higher salary up to the higher rate threshold can be more tax-efficient. The Employment Allowance offsets employer NICs, making the full salary more cost-effective.
Employment Allowance Eligibility for 2026/27
The Employment Allowance is £10,500 for 2026/27. Not all companies qualify. To be eligible, your employer Class 1 NIC liability must have been less than £100,000 in the previous tax year.
However, a company where the sole director is the only employee liable for employer’s Class 1 NIC will not qualify. If another person is employed and earns above the secondary threshold (monthly salary of £417 or more), the company may become eligible — subject to the standard conditions.
Full eligibility criteria are available on the HMRC Employment Allowance guidance page.
Get a Personalised Dividend Tax Planning Review from ProKeeper
The figures in this guide are general recommendations. The right strategy for your dividend tax planning for 2026 will depend on your company’s profit levels, your other income sources, your household circumstances, and your longer-term goals.
If you’d like us to review your specific position and build a bespoke tax planning strategy for 2026/27, contact the ProKeeper team today. We’re here to help you keep more of what you earn.
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Written by the ProKeeper Team
ProKeeper is a UK-based accountancy firm specialising in helping company directors, contractors, and small business owners structure their finances efficiently. Our team of qualified accountants and tax advisers work to maximise your take-home pay while keeping you fully compliant with HMRC.
Specialist areas: Director remuneration · Dividend tax planning · Corporation Tax · Self Assessment · Payroll
