{"id":643,"date":"2026-04-06T22:25:46","date_gmt":"2026-04-06T21:25:46","guid":{"rendered":"https:\/\/guide.no-worries.co.uk\/?post_type=ht_kb&p=643"},"modified":"2026-04-06T22:28:03","modified_gmt":"2026-04-06T21:28:03","slug":"limited-company-tax-operations-2026-27","status":"publish","type":"ht_kb","link":"https:\/\/guide.no-worries.co.uk\/index.php\/knowledge-base\/limited-company-tax-operations-2026-27\/","title":{"rendered":"Your Limited Company Tax Operations 2026\/27"},"content":{"rendered":"\n

Helpful information regarding the tax basis behind using your limited company for 2026\/27.<\/h3>\n\n\n\n

Any funds your limited company pays to you are considered your personal income. Unfortunately, it is not possible to pay yourself unlimited income from your limited company and not pay any personal taxes on this income. For the 2026\/27<\/strong> tax year the following tax bands are used:<\/p>\n\n\n\n

Personal Allowance<\/td>12,570<\/td><\/tr>
Basic Rate<\/td>37,700<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

For this tax year we recommend you pay yourself a salary of \u00a312,570<\/strong> (to be paid monthly at \u00a31,047.50 per month<\/strong>) and take any remaining earnings from your business in the form of dividends. At this salary level, there will be some employers\u2019 NIC due, but no PAYE or employee NI payable. Also, the salary is still high enough to count as a contributing year for your UK State Pension. For 2026\/27, the employee personal allowance remains \u00a312,570, while the employer secondary threshold remains \u00a35,000 and the employer Class 1 NIC rate remains 15%.<\/p>\n\n\n\n

Dividend Tax<\/h3>\n\n\n\n

A \u00a3500 tax-free dividend allowance<\/strong> is available for all taxpayers. You\u2019ll pay tax on any dividends you receive over \u00a3500 at the following rates:<\/p>\n\n\n\n

<\/td>Thresholds 2025\/26<\/strong><\/td>Dividend Tax Rate 2025\/26<\/strong><\/td><\/tr>
Personal Allowance<\/td>\u00a30 \u2013 \u00a312,570<\/td>0%<\/td><\/tr>
Basic-rate tax payers<\/td>\u00a312,571 \u2013 \u00a350,270<\/td>10.75%<\/td><\/tr>
Higher-rate taxpayers<\/td>\u00a350,271 \u2013 \u00a3125,140<\/td>35.75%<\/td><\/tr>
Additional-rate taxpayers<\/td>\u00a3125,141 upwards<\/td>39.35%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The allowance is available to anyone who has a dividend income. The rules ensure that tax will not be payable on the first \u00a3500<\/strong> of the dividend income irrespective of what non-dividend income is present, such as salary. And for the avoidance of doubt, dividends received on shares held in an Individual Savings Account (ISA<\/strong>) are tax free.

NOTE:\u00a0<\/em><\/strong>Incurring the dividend tax is still more tax effective than increasing your annual salary and incurring PAYE and NIC payments in many owner-managed company situations, although the advantage is a little smaller in 2026\/27<\/strong> because the basic and higher dividend tax rates have increased by 2 percentage points from the prior year. Dividend tax is assessed when you prepare your personal Self Assessment tax return.<\/p>\n\n\n\n

IMPORTANT:\u00a0<\/em><\/strong>We strongly recommend you keep your \u2018Take home payments\u2019 page up to date with every payment you make to yourself, to ensure you can track your total personal earnings.<\/p>\n\n\n\n

Allocating your Personal Earnings<\/h3>\n\n\n\n

The payments that you make from your company bank account to your personal bank account need to be in the form of one of the following, with a matching payment description.<\/p>\n\n\n\n

Salary<\/strong> \u2013 It is of the utmost importance that you pay yourself a separate monthly amount with payment description \u2018Salary\u2019<\/strong>, at the end of each month. This is due to the RTI filing requirements of HMRC. If this is not done correctly, then the filing that we submit to HMRC on a monthly basis is incorrect, and there will be penalties for incorrect filing, that you will be liable for. The only way to avoid you having to pay these penalties to HMRC is to make sure you pay yourself correctly. We provide you with your payment schedule for the year once your annual salary has been selected.<\/p>\n\n\n\n

Expense Reimbursements<\/strong> \u2013 This is to cover you for personally paid expenses that are incurred on behalf of the business. This payment needs to have the description \u2018Expense reimbursement\u2019<\/strong>. Check your Personal Tax page for a running total of expense reimbursements owing to you.<\/p>\n\n\n\n

Dividends<\/strong> \u2013 These are payments made out of the after-tax profit of the company. These payments need to have the description \u2018Dividends\u2019<\/strong>.<\/p>\n\n\n\n

Loans<\/strong> \u2013 Please contact your account manager for further information on taking a loan from your limited company, or take a look at our Loan guidance<\/a>.<\/p>\n\n\n\n

Most of our clients make payments to themselves on the same day their invoiced amount clears into their company bank account, based on the information that is contained on the company dashboard page.<\/p>\n\n\n\n

It is very important that you update your Take home payments page each time you make a payment to yourself, with the correct payment allocation, to ensure that the information our system provides you with is correct.<\/p>\n\n\n\n

Company Taxes<\/h2>\n\n\n\n

Your company will have to pay tax. Taxable profits for Corporation Tax include the money your company makes from doing business, investments and selling assets for more than they cost. Therefore, any company-related expenses you put through your limited company will lower your net profit and therefore lower your company\u2019s Corporation Tax liability.<\/p>\n\n\n\n

From 1 April 2023 onwards<\/strong>, and continuing into 2026\/27<\/strong>:<\/p>\n\n\n\n

If your company made a profit of \u00a350,000 or less<\/strong>, you\u2019ll pay the small profits rate<\/strong>, which is 19%<\/strong>.<\/p>\n\n\n\n

If your company made more than \u00a3250,000<\/strong> profit, you\u2019ll pay the main rate of Corporation Tax which is 25%<\/strong>.<\/p>\n\n\n\n

You may be entitled to Marginal Relief<\/strong> if your profits are between \u00a350,000 and \u00a3250,000<\/strong>.<\/p>\n\n\n\n

The \u00a350,000<\/strong> and \u00a3250,000<\/strong> profit thresholds are proportionately reduced for short accounting periods and by the total number of associated companies your company has.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Helpful information regarding the tax basis behind using your limited company for 2026\/27. Any funds your limited company pays to you are considered your personal income. Unfortunately, it is not possible to pay yourself unlimited income from your limited company and not pay any personal taxes on this income. 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