Latest news from [Company name].

For dividends paid on or after 6 April 2026, the income tax rates will be increased as follows:

The tax free dividend allowance remains at £500 per person.

These changes apply to individuals and trusts and could cost basic/higher rate taxpayers up to £2,500 in additional income tax.

Please note that dividends cannot be legally declared retrospectively and would recommend that you discuss any pre 5 April 2026 dividend requirements with us as soon as possible.

Any dividends declared after 6 April 2026 will be taxable at the new higher rates.

Specifically for limited company shareholders, directors loan accounts should be reviewed before 5 April 2026 and consideration given to clearing any overdrawn balances with either a bonus or a dividend.

As the difference in the effective rate of tax (company and personal) payable on dividends versus salary is minimal at the higher rates of tax, it could be more cost effective to pay a salary/bonus rather than a dividend.

Accelerating income into the 25/26 tax year could push a shareholder into a higher tax bracket, trigger the High Income Child Benefit Charge (over £50,000), or result in the loss of personal allowance (over £100,000) and a detailed review is therefore recommended.

For suggestions on how you and your family could improve the tax efficiency of your affairs please read our 2026 year-end tax planning guide:  Fairhurst Year End Tax Planning Guide 2026.pdf

If you would like personalised advice or our assistance, please speak to your usual contact at Fairhurst or a member of the tax team on 01942 241103 to discuss. 

‍