The dividend rules are changing – Disclosure rules on tax returns and new rates

From the end of the 2025/26 tax year, 5 April 2026, you must report your dividend income accurately as part of wider personal tax reforms.


Directors of close companies must disclose the company name, registration number, specific dividend amounts and their highest percentage shareholding on Self-Assessment returns.


Dividends from your own company must also be shown separately from other income.


Dividend tax rates for 2026/27


For the 2026/27 tax year, commencing 6 April 2026, two dividend tax rates will increase by two percentage points:

·      Basic rate rises to 10.75 per cent

·      Higher rate rises to 35.75 per cent


There is currently no increase for additional rate taxpayers, who will continue to pay dividend tax at a 39.35 per cent.


The annual dividend allowance also remains at £500 and applies to all rates.


Dividends continue to offer a tax advantage over salary in most cases, although the difference between the two is reducing.


Directors should review how profits are taken and consider whether the current mix of salary and dividends remains appropriate.


Who has to report dividend tax?


Dividend tax most commonly applies to shareholders and company directors.

Individuals receiving dividends outside of an ISA or pension over the £500 allowance threshold must report them to HMRC.


Anyone who receives more than £10,000 in dividends may be required to submit a Self-Assessment tax return.


Reviewing your position


If you have concerns about dividend taxation or wider financial pressures, we can review your tax position, explain the latest changes from HMRC and help you create a bespoke plan to meet your personal financial goals.


Looking to understand and protect your finances? Speak to our experts.

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