A two week warning has been issued over a £600 HMRC tax hike set to take effect from April.

A tax compliance firm has sounded the alarm over changes to the tax rules set by HMRC which will affect households from April 6, 2026.

From the start of the new tax year, changes are being made to dividends charges. The tax office will increase the basic rate of dividend tax from 8.75% to 10.75%, and the higher rate will jump from 33.75% to 35.75%.

This will affect freelancers, contractors and small business owners in particular, many of whom pay themselves through salary and dividends.

According to tax compliance experts at Qdos, the change will leave those affected an average of £600 worse off.

For a typical company director taking around £50,000 a year in income, structured as a mix of salary and dividends, the increase to the basic rate of dividend tax could see them pay around £600 more in tax every year, Qdos says. For those earning £100,000, the increase in the higher dividend rate could result in an additional tax bill of roughly £1,400 per year.

Commenting on the changes, Qdos CEO, Seb Maley, said:

“With just weeks to go until the new rates take effect, now’s the time for company directors to review their remuneration strategy – and potentially, make use of the existing thresholds before they rise next month.

“Many directors of small limited companies structure their income through a combination of salary and dividends, which is a compliant way to operate. For someone taking just over £50,000 a year from their business, the increase in the basic dividend tax rate from 8.75% to 10.75% could mean paying roughly £600 more in tax each year. This nearly triples for someone paying themselves around £100,000 a year, to around £1,400 as a result of the higher rate changes.

“Alongside the need to map out a plan for these tax changes is the need for limited company directors to ensure their tax compliance. This is something HMRC will be paying very close attention to, in light of the new rates kicking in.”