Self Assessment for company directors: dividends and 31 January 2027
Being a director does not on its own mean a tax return. Dividends over £10,000, other untaxed income or a notice from HMRC do. The 2025/26 return and the tax are due by 31 January 2027, at 8.75% on dividends; from 2026/27 the rate is 10.75%. With a worked example.
- Category
- Taxes
- Updated
- Author
- Norman
A company director must file a Self Assessment tax return when HMRC sends a notice to file, when dividends are over £10,000, or when there is other income that is not taxed through PAYE. For the 2025/26 tax year, the online return and the tax you owe must reach HMRC by 11:59pm on 31 January 2027.
Law as of 11 November 2026
Self Assessment rests on the Taxes Management Act 1970: notice of liability (s. 7), the return (s. 8), payments on account (s. 59A) and the final payment (s. 59B). Dividend tax rates are in the Income Tax Act 2007 s. 8; Finance Act 2026 s. 4 raised the ordinary and upper rates by 2 percentage points from 6 April 2026.
When a director must file a tax return
Being a director is not, on its own, one of the reasons HMRC lists for filing a return. A salary paid through the company's payroll is taxed under PAYE. You need a return if any of these applies in the tax year (6 April to 5 April):
- HMRC sent you a notice to file. Then you must file.
- Dividends over £10,000. Above this amount you need a Self Assessment return.
- Dividends above your allowances, up to £10,000. You must tell HMRC, but you can choose: a tax return, or ask HMRC to collect the tax through your tax code. Without a return, tell HMRC between 6 April and 5 October.
- Other untaxed income, for example rent or foreign income, may also need a return.
- Self-employment on the side with income over £1,000, a capital gain with tax to pay, or the High Income Child Benefit Charge not paid through PAYE.
No tax is due on dividends inside your unused Personal Allowance and the £500 dividend allowance, and then you need not tell HMRC about them.
If you have never filed before, or did not file for 2024/25, you had to register for Self Assessment by 5 October 2026. Register now if you missed it: HMRC then gives you 3 months from its letter to file, but the tax is still due by 31 January 2027. If you register late and do not pay in full by then, HMRC may charge a failure to notify penalty (TMA 1970 s. 7).
Deadlines for the 2025/26 return
| Date | What is due |
|---|---|
| 5 October 2026 | Register for Self Assessment if you are new or did not file for 2024/25 |
| 31 October 2026 | Paper return |
| 30 December 2026 | Online return, if you want a bill under £3,000 collected through your tax code |
| 31 January 2027 | Online return; all tax still owed for 2025/26; first payment on account for 2026/27 |
| 31 July 2027 | Second payment on account for 2026/27 |
All deadlines end at 11:59pm. Legal basis: TMA 1970 ss. 8, 59A and 59B.
Dividend tax in 2025/26 and 2026/27
The return you file by 31 January 2027 covers 2025/26, so it uses the old dividend rates. The higher rates apply to dividends paid from 6 April 2026 and first show up on the return due by 31 January 2028.
| 2025/26 (return due 31 January 2027) | 2026/27 (return due 31 January 2028) | |
|---|---|---|
| Personal Allowance | £12,570 | £12,570 |
| Dividend allowance | £500 | £500 |
| Basic rate (dividends) | 8.75% | 10.75% |
| Higher rate (dividends) | 33.75% | 35.75% |
| Additional rate (dividends) | 39.35% | 39.35% |
| Basic rate band above the Personal Allowance | £37,700 | £37,700 |
Legal basis: ITA 2007 ss. 8 and 13A; Finance Act 2026 s. 4 (rates from 2026/27); Finance Act 2021 s. 5 as amended by Finance Act 2026 s. 10 (Personal Allowance and basic rate limit, frozen to 2030/31).
Dividends sit on top of your other income. The dividend allowance is taxed at 0%, but it still uses up part of your band (ITA 2007 s. 13A). The Personal Allowance falls by £1 for every £2 of income above £100,000.
In Scotland your salary is taxed at the Scottish rates: for 2025/26, above the £12,570 Personal Allowance, 19% on the first £2,827, then 20% to £14,921, 21% to £31,092, 42% to £62,430, 45% to £125,140 and 48% above. Dividends are taxed at the UK dividend rates above, in Scotland too.
Worked example: salary and dividends
Priya is the only director and shareholder of her limited company in England. In 2025/26 she takes a salary of £12,570 through the payroll and £32,500 in dividends. She has no other income.
- Salary: £12,570 uses the whole Personal Allowance, so no income tax is due on it.
- Dividends: £32,500. Her total income is £45,070, below the higher rate threshold of £50,270, so all dividends are in the basic rate band.
- Dividend allowance: the first £500 is taxed at 0%.
- Dividend tax: £32,000 × 8.75% = £2,800.
- Her dividends are over £10,000, so she files a Self Assessment return.
Because her bill is £1,000 or more and none of it was taxed at source, HMRC also asks for payments on account for 2026/27, each half of £2,800:
| Date | Payment | Amount |
|---|---|---|
| 31 January 2027 | Tax for 2025/26 | £2,800 |
| 31 January 2027 | First payment on account for 2026/27 | £1,400 |
| 31 July 2027 | Second payment on account for 2026/27 | £1,400 |
In January 2027 she pays £4,200, one and a half times her 2025/26 bill. This first-year jump surprises many new directors.
If she takes the same pay in 2026/27, her dividend tax rises to £32,000 × 10.75% = £3,440. She has paid £2,800 on account, so on 31 January 2028 she pays the balance of £640 plus her first payment on account for 2027/28 of £1,720, £2,360 in total.
The same pay at other dividend levels, with the £12,570 salary:
| Dividends | Dividend tax 2025/26 | Dividend tax 2026/27 |
|---|---|---|
| £10,000 | £9,500 × 8.75% = £831.25 | £9,500 × 10.75% = £1,021.25 |
| £32,500 | £32,000 × 8.75% = £2,800 | £32,000 × 10.75% = £3,440 |
| £60,000 | £37,200 × 8.75% + £22,300 × 33.75% = £10,781.25 | £37,200 × 10.75% + £22,300 × 35.75% = £11,971.25 |
At £60,000 the first £37,700 of dividends fill the basic rate band (£500 of it at 0%) and the other £22,300 are taxed at the higher rate. A bill under £1,000, as for £10,000 of dividends in 2025/26, means no payments on account.
How to file your return
- Get your Unique Taxpayer Reference (UTR). You receive it after you register. If you filed before, it is on earlier returns and letters from HMRC.
- Collect the figures: your salary and the tax deducted from your P60, the dividends you received in the tax year, and any other income.
- File online by 31 January 2027. Report the salary on the employment pages and the dividends as dividends from UK companies.
- Pay the tax and the first payment on account by 31 January 2027. Your payment reference is your 10-digit UTR followed by the letter K.
If you file or pay late
| Late | Penalty |
|---|---|
| Return 1 day late | £100 |
| Return 3 months late | £10 a day, up to £900 |
| Return 6 months late | 5% of the tax due or £300, whichever is greater |
| Return 12 months late | Another 5% or £300, whichever is greater |
| Tax 30 days, 6 months and 12 months late | 5% of the tax unpaid at each point |
Legal basis: Finance Act 2009 Schedules 55 and 56. HMRC also charges interest on late tax: 7.75% a year now and 8.00% from 24 November 2026 (base rate plus 4%).
Making Tax Digital does not cover salary and dividends
Making Tax Digital for Income Tax applies from 6 April 2026 to people whose qualifying income was over £50,000 in 2024/25, and from 6 April 2027 over £30,000 in 2025/26. Qualifying income is only income from self-employment and property, before expenses (Income Tax (Digital Obligations) Regulations 2026, regs 25 to 27). A director who has only a salary and dividends keeps filing one return a year. Rental income or a sole trade on the side counts towards the threshold.
Norman in the UK
Norman is an AI bookkeeping app for small companies and sole traders. In Germany and Poland it is live today: it categorises bank transactions, reads receipts, writes invoices and prepares tax returns, and you review and approve every step. We are preparing Norman for the UK. Until then, our free UK guides are yours to use, no account needed, and here is more about Norman in the UK.
Frequently asked questions
Do all company directors have to file a Self Assessment tax return?
No. You must file if HMRC sends you a notice to file, if your dividends are over £10,000, or if you have other income that is not taxed through PAYE. A director with only a salary through the payroll and no notice from HMRC usually does not need one.
What dividend tax rate applies on my return due on 31 January 2027?
The 2025/26 rates: 8.75% in the basic rate band, 33.75% in the higher rate band and 39.35% in the additional rate band, after the £500 dividend allowance. The rates of 10.75% and 35.75% apply to dividends paid from 6 April 2026.
Why is my first January bill so much bigger?
Because you pay the full tax for 2025/26 and the first payment on account for 2026/27, half of last year's bill, on the same day. Payments on account are not due if your bill was under £1,000 or more than 80% of your tax was taken at source.
Can I pay my Self Assessment bill through my tax code?
Yes, if you owe less than £3,000, you already pay tax through PAYE and you file online by 30 December 2026 (paper by 31 October 2026). HMRC then collects it from your salary over 12 months. It does not work if your PAYE income is too low to collect it.
Does Making Tax Digital apply to company directors?
Not to salary and dividends. Making Tax Digital for Income Tax counts only self-employment and property income towards its thresholds of £50,000, £30,000 from April 2027 and £20,000 from April 2028.