🟣🟢 Good week, bad week

Hello, Happy Sunday 👋

I hope you’ve had a great weekend. I know I certainly have after the drama of last week.

I’ve been catching up with my reading and always enjoy the “Good Week, Bad Week” section in the MoneyWeek magazine. So here’s my own ‘budget week’ version.

Good week for… no change. All the big scary rumours about pension tax relief, tax free cash and IHT quietly disappeared. No changes at all.

Bad week for… business owners who rely on dividends. Dividend tax is rising by two percentage points from April 2026.

That takes the basic dividend rate from 8.75 percent up to 10.75 percent, and the higher rate from 33.75 percent up to 35.75 percent. Not enormous, but enough to change the numbers for anyone taking most of their income this way.

So what does that mean in practice if you run your own company and pay yourself through a mix of salary and dividends?

Here are a few things worth thinking about before the next tax year rolls around.

1. Review your usual dividend pattern If you take dividends up to the basic rate threshold each year, the higher rate will take a bit more out of your pocket from 2026 onwards. It’s worth checking whether the same pattern still makes sense when you look at your wider income and the frozen thresholds.

2. Think about salary versus dividends. 

Salary is tax deductible for the company, dividends are not. With corporation tax now tiered, nudging the balance slightly can sometimes produce a more efficient outcome overall. Ask your accountant if you’re not sure which side of the line you’re on.

3. Don’t forget pension contributions. 

For many business owners, pensions remain one of the most tax-efficient ways to extract profit. They reduce corporation tax, avoid NI and dividend tax altogether and contribute to your future independence. It’s one of the few levers that still works very well.

4. Timing might matter next year. 

If you were planning a larger dividend anyway, your accountant may want to think about timing around the rate change in April 2026. Sometimes spreading dividends or bringing something forward makes sense. Sometimes it doesn’t.

5. Look at your whole income mix.

Dividend tax doesn’t sit in isolation. Savings income tax is rising. Rental income tax is rising. Tax thresholds are frozen until 2031. If you have more than one type of income, it’s the combined effect that matters, not just the dividend rate.

It’s always a good idea to speak to your accountant but it should help you frame the conversation so you go in armed with the right questions rather than guesswork.

And if you want to look at how this fits into your bigger picture, whether that’s retirement planning, future lifestyle decisions or preparing the business for an eventual exit, that’s where I step in.

Why not get a Discovery Call booked in for early January?

Call one of my team on 0117 9629696 and they’ll find you the perfect slot.

The tax is one piece. The plan is the thing that makes it all make sense.

😎 THAT’S IT FOLKS

If you have any questions at all, do ping me a reply or get in touch 👇

Hilary 😉

P.S. WHAT ELSE? 👉 Book a call with me here (or if you prefer, call one of my team on 0117 9629696) and I’ll help you make sense of what you’ve got and what it could be doing for you.

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