If you run a limited company in Kent and take dividends, now is the time to review how you pay yourself for the 2026/27 tax year. HMRC confirms that dividend tax rates from 6 April 2026 to 5 April 2027 are 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers, and 39.35% for additional-rate taxpayers, with tax due only above the dividend allowance.
That makes dividend tax a practical planning issue, not just a tax update. Kent has 65,370 enterprises, and 90.0% are micro businesses, so many directors are making pay decisions close to the business.
For local support, our accountants in Tunbridge Wells can help you review profit, salary, dividends, cash flow, and personal tax together. Call 01732 387 059.
Good dividend planning is about paying yourself in a way that supports your household, your company, and your next financial year.
How does the dividend tax rate increase in the UK affect directors?
The dividend tax rate increase raises the ordinary dividend rate from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. The additional rate remains at 39.35%. For directors who take a modest salary and dividends, the same dividend can leave slightly less after tax.
The point is not to stop using dividends. Dividends can still be part of a sensible extraction plan, but they need to be checked against your salary, other income, pension contributions, shareholder arrangements, and company cash needs. A dividend should come from profit that genuinely exists.
What does the 10.75% dividend tax rate mean for basic-rate directors?
The 10.75% dividend rate applies to taxable dividends above the allowance. HMRC also makes clear that your tax band is worked out by adding dividend income to your other income, so a director can pay tax at more than one rate if dividends push total income into a higher band.
A common planning mistake is looking only at the dividend rate. The better question is: what level of total income gives you the right mix of personal income, company cash, and future flexibility? A director taking £35,000 in dividends may need a different approach from a director taking £75,000.
How should limited company director dividend planning work?
Good planning starts with three checks.
- Check the expected company profit before tax.
- Decide how much cash the company needs for VAT, Corporation Tax, payroll, suppliers, and reserves.
- Review personal income needs before deciding the salary and dividend mix.
This is where management accounts help. Waiting until year-end often limits your options, because dividends may already have been taken, and the personal tax bill may already be forming. We work with limited companies using regular reporting, annual accounts, company tax returns, quarterly financial reports, reviews, and tax planning where needed.
What should your director salary and dividend split look like in 2026/27?
A good split depends on profit, staff, other shareholders, other income, and how much money the business needs to keep aside.
Salary and dividends do different jobs. Salary gives regular income and may help with contribution records and payroll planning. Dividends distribute post-profit value to shareholders. The right split usually comes from modelling a few options side by side, rather than repeating last year’s figures.
For directors near a tax band boundary, timing also matters. Taking a dividend before or after a personal income change can alter the rate applied to part of that dividend. A review with our accountants in Bromley can help you test those options before decisions are made.
Why use a local Kent accountant for your dividend strategy?
An accountant should bring local business context as well as tax knowledge. Kent’s business base is largely made up of micro enterprises, and construction is the county’s largest enterprise sector at 18.4%, above the national proportion of 14.1%. That matters because many directors have uneven cash flow, project-led income, or seasonal pressure points.
Based in Sevenoaks, we support sole traders, limited companies, and start-ups with bookkeeping, payroll, tax planning, VAT returns, HMRC compliance, and business advice. Each client works with a dedicated accountant who understands their business. Our team also works through Sage, QuickBooks, Xero, Oracle, and KashFlow, which helps keep planning based on current numbers rather than guesswork.
What should directors do before taking their next dividend?
Before you take your next dividend, check these five points:
- Is there enough retained profit to support it?
- Will the dividend move you into a higher tax band?
- Have you allowed for the £500 dividend allowance?
- Does the company need more cash kept aside this quarter?
- Would a different salary-dividend balance give a better result?
This is also a good moment to look ahead, not only backwards. Our process includes understanding your business, reviewing options, providing a dedicated accountant or bookkeeper, checking work before sign-off, and arranging follow-up meetings to discuss annual accounts and the year ahead.
Planning dividends more effectively in 2026/27
The 2026/27 dividend rates do not remove the value of dividends for limited company directors. They simply make planning more important. A small rate change can have a real effect when repeated across the year, especially if your income sits near the higher-rate threshold.
The strongest approach is to review your numbers before dividends are declared, keep company cash needs visible, and make decisions using current accounts rather than habit. For a clearer view before the next dividend decision, call 01732 387 059
Frequently asked questions
What are the dividend tax rates for 2026/27?
For 2026/27, dividend tax rates are 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers, and 39.35% for additional-rate taxpayers.
Does the dividend allowance still apply in 2026/27?
Yes. HMRC’s technical note states that the dividend allowance remains unchanged, and the dividend allowance is £500.
Should directors still take dividends in 2026/27?
Often, yes, but the amount and timing should be reviewed. Dividends can still work well when they fit profit, personal income, and company cash flow.
Can dividends push me into a higher tax band?
Yes. HMRC explains that you work out your tax band by adding dividend income to your other income, so some dividends may be taxed at a higher rate.
When should a Kent director review dividend planning?
Review before declaring dividends, during the tax year, and before year-end. That gives you more time to adjust salary, dividends, reserves, and timing.