How it works
Dividends are paid from company profits after Corporation Tax. There is a tax-free dividend allowance, then dividends are taxed at their own rates depending on your income band — lower than the equivalent income tax rates.
Salary plus dividends
Many directors take a modest salary plus dividends to be tax-efficient. The exact mix depends on the year’s thresholds, so this is one to model or check with an accountant.
Frequently asked questions
Where are the current dividend rates?+
They change at Budgets — verify the current allowance and rates on GOV.UK before planning.