Increase in tax on dividends, directors’ loan interest rate rise, business asset disposal relief hike, frozen thresholds, inheritance tax for farmers and family businesses, Making Tax Digital starts, CIS, and more
Dividend tax
There will be a 2% increase in the rates of income tax paid on dividends at the basic and higher rate of taxation. The rates of tax on dividends for 2026-27 will increase to 10.75% at the basic rate and 35.75% for the higher rate. The additional rate will remain 39.35%.
Directors’ loans tax charge
The tax charge on directors’ loans made to participators by close companies will increase by 2% from 33.75% to 35.75% for loans made on or after 6 April 2026 under section 455 rules. This change will be particularly relevant for owner managed businesses where directors regularly use their loan accounts to manage cash flow, warned tax experts at Forrester Boyd. The rules apply where a director is a participator, meaning a shareholder, and the company is classed as a close company, typically one controlled by five or fewer shareholders.
