Plenty of directors know a new tax year began on 6 April 2026. Far fewer realise that two things became dearer on that very day: dividends, and any money you owe your own company through an overdrawn loan account. Both rose by two percentage points. If you are weighing up an Accountancy Firm London director can lean on, this is exactly the sort of detail they should raise before your year end, not after it.
Below you will find the current 2026/27 figures from HMRC and GOV.UK, three worked examples with numbers you can reuse, and a short checklist for the months ahead.
Quick answer: For 2026/27, dividends above the £500 allowance cost 10.75% inside the basic rate band and 35.75% inside the higher rate band. Employers pay 15% National Insurance on each person’s pay above £5,000. A sum taken from your company as a loan on or after 6 April 2026, and still owed when Corporation Tax falls due, attracts a 35.75% charge. Company profits are taxed at between 19% and 25%.
These figures stand as October 2026. The Budget on 28 October could alter them, and we will refresh this guide straight afterwards.
Which 2026/27 tax figures matter most to company directors?
| Item | 2026/27 figure | Worth knowing |
| Corporation Tax | 19% on profit to £50,000; 25% on profit over £250,000 | Marginal relief covers the gap in between |
| Dividend tax | 10.75% basic; 35.75% higher; 39.35% additional | £500 allowance; basic and higher rates each up 2 points |
| Employer NIC | 15% above £5,000 of pay | Employment Allowance can offset up to £10,500 |
| Employee NIC | 8% from £12,570 to £50,270, then 2% | Nothing payable under £12,570 |
| Loan charge (section 455) | 35.75% on loans made from 6 April 2026 | Earlier loans from April 2022 stay at 33.75% |
| VAT registration | £90,000 of taxable sales over any 12 months | Cancellation possible below £88,000 |
You can confirm each line on GOV.UK: dividend tax, Corporation Tax rates and the employer rates page. One detail often missed: if your company has associated companies, the two Corporation Tax limits are divided between them.
How does dividend tax work once you cross into the higher band?
Dividends are stacked on top of everything else you earn, so your salary decides where they start. Picture a director on a £12,570 salary, which swallows the whole Personal Allowance, who then draws £45,000 in dividends. The basic rate band is £37,700, so the payout straddles two bands.
- The first £500 sits in the dividend allowance and is taxed at 0%, though it still fills part of the band
- The next £37,200 is taxed at 10.75%, which gives £3,999.00
- The last £7,300 spills into the higher band at 35.75%, which gives £2,609.75
- Total dividend tax: £6,608.75
Look at that final slice. It bears more than three times the rate of the dividends beneath it. That is why the timing of payments, either side of 5 April, deserves a proper conversation rather than a guess. Ask your Accountancy Firm London adviser to model it with your real profit.
Two housekeeping rules sit behind every dividend. The company can only distribute profit left after Corporation Tax. And each payment needs a board minute and a voucher. A payout with no profit behind it may be recharacterised as a loan, which leads straight to the section 455 charge below. Dividends above your allowances are reported through Self Assessment.
Is a £12,570 salary better than a £6,708 one?
Three thresholds shape this choice. Employer NIC begins at £5,000. Employee NIC begins at
£12,570. And earnings of £6,708 or more still earn a State Pension qualifying year, even though no employee NIC is paid.
| Annual salary | Employer NIC | Employee NIC | State Pension year |
| £6,708 | £256.20 | Nil | Qualifies |
| £12,570 | £1,135.50 | Nil | Qualifies |
Moving from the lower figure to the higher adds £5,862 of salary and £879.30 of employer NIC. If your company’s profit sits in the 19% band, Corporation Tax relief on that combined
£6,741.30 is £1,280.85. So the true cost is about £5,460 for £5,862 of extra pay that the director
receives free of income tax and NIC. Whether that trade is worthwhile depends on your profit, your other income and your pension plans, which is why your Accountancy Firm London contact should run the figures for you each year.
Watch out for one trap. The Employment Allowance is not available where the director is the only person paid above the £5,000 threshold, so a single-director company normally pays the NIC in full. The rules are on GOV.UK’s Employment Allowance page.
What does it cost to take money out as a loan?
When a close company lends to a director or shareholder, HMRC charges the company section 455 tax if the balance is still open when the company’s Corporation Tax payment date arrives. The director does not pay it personally.
The rate mirrors the dividend upper rate. HMRC’s Company Taxation Manual records 33.75% for loans from April 2022 and 35.75% for loans from 6 April 2026. Suppose a director borrows
£15,000 in 2026/27 and leaves it untouched. The charge is £5,362.50, compared with £5,062.50 under the old rate.
The money does come back once the loan is repaid, but only after a delay, so your cash sits with HMRC in the meantime. Take care with the 30 day rule too. Repaying a balance and borrowing again shortly afterwards can leave HMRC refusing to treat the repayment as genuine. A sensible routine is to reconcile the loan account before the year end, then clear any balance with a declared dividend or salary where profit allows. Any Accountancy Firm London team worth hiring will make that reconciliation a fixed step in your year-end process.
When does VAT registration become compulsory?
The test looks at any 12 consecutive months, not at your tax year or company year. Say a consultant bills £7,800 every month. After twelve months, sales total £93,600, which is over the
£90,000 limit. HMRC must be told within 30 days of the end of that month. A separate forward-looking test also applies: if you expect to exceed £90,000 within the next 30 days alone, such as after landing one big contract, you must register at once.
Registering voluntarily below the limit can suit businesses whose customers reclaim VAT. If your sales later settle under £88,000, you may ask to cancel. See GOV.UK’s guidance on when to register.
Which records should a limited company hold?
Keep accounting records for at least six years after the end of the period they cover. A sensible file includes:
- Sales and purchase invoices, plus receipts
- Bank statements and payroll records
- Your director’s loan account ledger
- Board minutes and dividend vouchers
- VAT records, if you are registered
On expenses, HMRC applies a business purpose test. A cost must exist purely for the trade, and a mixed-use item such as a phone you also use privately is split, with only the business share allowed. Tidy records are your best protection if HMRC ever opens an enquiry, and a good Accountancy Firm London bookkeeping team will keep them in order all year.
Which dates should directors diary this winter?
Three deadlines are close. Sole traders and landlords already in Making Tax Digital for Income Tax must send their second quarterly update by 7 November 2026. Existing directors must complete Companies House identity verification before the transition ends in mid-November 2026. And your 2025/26 Self Assessment return and payment are due on 31 January 2027.
For more detail, read our guides on the 7 November update, the £30,000 threshold from April 2027 and the full HMRC deadline calendar.
What should an Accountancy Firm London actually do for your company?
A capable Accountancy Firm London business covers both compliance and planning. In practice, expect it to:
- File your annual accounts, Corporation Tax return and confirmation statement before each cut-off
- Run your pay cycle and report to HMRC in real time through payroll services
- Build your salary and dividend plan from real profit figures before 5 April
- Reconcile the director’s loan account ahead of the year end
- Watch your VAT turnover each month
- Tell you whether Financial Audit Services London are needed or an exemption applies
As an Accountancy Firm London clients can ring for straight answers, Brayan & Spencer Associates is registered as auditors in the United Kingdom by the Association of Chartered Certified Accountants. Our Accountant And Tax Specialist team and tax advisory service act for limited companies, sole traders, landlords and contractors. Our Accounting & Tax Services in London include bookkeeping, statutory and management accounts, VAT and company secretarial support. We also work with clients in Fulham, Kensington and Wimbledon.
Want your salary, dividend and director’s loan position reviewed for 2026/27? Call 0207 183 5956 or visit www.bsassociate.co.uk to book a free consultation with our Accountancy Firm London team. You can also contact us online.
Frequently asked questions
After the £500 allowance, you pay 10.75% on dividends in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. The basic and higher rates went up by two points on 6 April 2026.
It is 35.75% for loans made on or after 6 April 2026 that remain unpaid when the company’s Corporation Tax is due. Loans made between 6 April 2022 and 5 April 2026 keep the 33.75% rate.
Employers pay 15% on each person’s earnings above £5,000 a year. The Employment Allowance can cut the bill by up to £10,500, though a company whose only paid employee is the director generally cannot claim it.
You must register once taxable sales pass £90,000 across any 12 consecutive months. You may apply to cancel if your sales will stay below £88,000.
There is no universal figure. A £12,570 salary uses the full Personal Allowance and costs
£1,135.50 in employer NIC, while £6,708 costs £256.20 and still protects your State Pension record. Have your accountant model both against your profit.
