← Glossary Business glossary
What is Dividend?
A payment of company profit to its shareholders, taxed at its own rates.
A dividend is money paid out of a company’s profits after Corporation Tax, to the people who own shares in it. For a one-person company, that is usually you.
Dividends have their own tax rates, and they went up in April 2026. For 2026/27 they are 10.75% at the basic rate, 35.75% at the higher rate and 39.35% at the additional rate, with a £500 tax-free dividend allowance.
That rise matters if you are reading older advice. Almost every salary-versus-dividends comparison written before April 2026 assumes 8.75% and 33.75%, and its conclusion may no longer hold.
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