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Corporation Tax
Corporation tax rate
Small Co. Rate 21% from £0 to £300,000
Upper Maginal relief 7/400 £300,000 £1.5M
Standard rate 28% from £1.5M and over
Dividend Information
Gross dividend = (10/9)*Net dividend
Taxable gross income = Gross salary + other income + grossed up dividend - tax free allowance
Dividend tax is 32.5% with the first 10% already paid via a tax credit. The additioal tax due is paid as part of your annual tax return.
Further information visit
Dividend tax rates
All company dividends are taxed the same way - whether you're receiving investment income from a FTSE-listed company, or income from your own limited liability company.
There are two rates of dividend tax in the UK.
- 10% on dividends for income received below the higher rate income tax
threshold
- 32.5% on dividends for income received above the higher rate income
tax threshold
Dividend Tax Credit
The actual rate of tax you pay in dividends will be lower than these headline rates, as dividends automatically receive a 10% tax credit. This takes into account the fact that you will already have paid corporation tax on your company profits.
So, for lower rate taxpayers, you will have no further tax to pay on dividends, as the 10% tax credit cancels out the 10% 'dividend ordinary rate'.
For higher rate taxpayers, you dividend tax liability will effectively be 22.5% (the 'dividend upper rate' of 32.5% minus the 10% tax credit).
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