We’ll compare that with “working people” – a phrase used five times in the budget speech. That person was left with £3,293.30 per month.
Here goes…
The typical advice given by most accountants would be to take a nominal salary of £12,570 and the rest in dividends. Dividends are a distribution of profits after tax. So before the dividend is paid, corporation tax is deducted of at least 19%. £50,000 less £12,570 is £37,430 taxed at 19% leaves £30,318.30 as taxable dividend income. This tax year (2025/26) that will be taxed at 8.75% leaving a monthly take home pay of £3,352.95. Less than £60 per month more than the “working person”.
Because their broader shoulders can take it, in 2026/27 the basic dividend rate will be 10.75, meaning take home pay is reduced to £3,302.42 – less than £10 better off
As an aside, for those with an income in excess of £125k there has been no increase in the additional rate dividend tax – perhaps their shoulders are not as broad.
Who has the broadest shoulders?
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What about Director/Shareholders?
Let’s keep it simple. The same £50k of taxable profits with a sole director shareholder extracting that in the most tax efficient way possible.
https://lnkd.in/e5ktvYhb
We’ll compare that with “working people” – a phrase used five times in the budget speech. That person was left with £3,293.30 per month.
Here goes…
The typical advice given by most accountants would be to take a nominal salary of £12,570 and the rest in dividends. Dividends are a distribution of profits after tax. So before the dividend is paid, corporation tax is deducted of at least 19%. £50,000 less £12,570 is £37,430 taxed at 19% leaves £30,318.30 as taxable dividend income. This tax year (2025/26) that will be taxed at 8.75% leaving a monthly take home pay of £3,352.95. Less than £60 per month more than the “working person”.
Because their broader shoulders can take it, in 2026/27 the basic dividend rate will be 10.75, meaning take home pay is reduced to £3,302.42 – less than £10 better off
As an aside, for those with an income in excess of £125k there has been no increase in the additional rate dividend tax – perhaps their shoulders are not as broad.
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