Knowledge Centre Category: D

Disbursement

A disbursement is a payment made on behalf of a client for goods or services used directly by that client, which can be recharged without VAT if certain conditions are met. Correctly distinguishing between disbursements and expenses is an important part of VAT compliance, and is covered in detail in Green Accountancy's Knowledge Centre.

Dividend

A dividend is a payment made by a company to its shareholders from post-tax profits, and is a common way for owner-managers to draw income from their business. Unlike salary, dividends are not subject to National Insurance, though they must only be paid when sufficient profit reserves exist.

Dividend Allowance

The dividend allowance is the amount of dividend income an individual can receive tax-free each year, currently £500 for the 2026/27 tax year. Any dividend income above this amount is taxed at dividend tax rates through self-assessment.

Dividend Tax Rates

In 2026/27 dividends are taxed at 10.75% (basic rate); 35.75% (higher rate) and 39.35% (additional rate). Dividends are taxed "last" i.e. all other income sources are set against personal allowances and tax bands, with dividends taxed at the highest rate of tax that you pay.