Dividend Tax Explained for OnlyFans Creators Running a Ltd Company

If you run your OnlyFans income through a limited company, dividends are how you get most of your money out of the business. They are taxed differently from salary, and understanding how they work is key to making the Ltd structure worthwhile.

This guide explains what dividends are, how the tax works, and how to structure your pay in a way that is efficient without crossing any lines with HMRC.

Important: this is not financial advice. Tax rules change, and everyone’s situation is different. Always speak to a qualified accountant before making decisions about your tax obligations.

What are dividends?

A dividend is a payment a company makes to its shareholders from its profits. As the director and sole shareholder of your Ltd company, you are essentially paying yourself from what the company has earned after Corporation Tax.

Dividends are not a salary. They are not subject to National Insurance contributions, which is the main reason they are attractive. But they can only be paid from profits, and the company must pay Corporation Tax on those profits first.

Why directors pay themselves in dividends

The standard approach for small company directors is to take a small salary and then draw additional income as dividends. The reasoning is straightforward:

• Salary attracts both employer and employee National Insurance contributions.
• Dividends do not attract any National Insurance at all.

By keeping your salary low and taking the rest as dividends, you reduce the total amount of NI you and your company pay. This is the core of the salary-plus-dividends strategy, and it is perfectly legal, widely used, and well understood by HMRC.

Corporation Tax comes first

Before you can pay dividends, the company needs to pay Corporation Tax on its profits. The rates for 2025/26 are:

• Small profits rate: 19% on profits up to £50,000
• Main rate: 25% on profits above £250,000
• Marginal relief: for profits between £50,000 and £250,000, the effective rate tapers between 19% and 25%. The marginal rate in this band works out at 26.5%.

So if your company earns £60,000 in profit, it does not pay a flat 19% on the lot. The first £50,000 is effectively at 19%, and the next £10,000 is at the marginal rate. Your accountant will calculate the exact figure.

The money left after Corporation Tax is what is available to distribute as dividends.

The dividend allowance

Every individual gets a dividend allowance of £500 for 2025/26. This is the amount of dividend income you can receive tax-free each year. It has reduced steadily over the years (it was £2,000 as recently as 2022/23), so it is a modest benefit at this point, but worth noting.

The dividend allowance still uses up your basic or higher rate band. It is a zero-rate band, not an addition to your Personal Allowance.

Dividend tax rates

Dividend income above the £500 allowance is taxed at the following rates for 2025/26:

• Basic rate: 8.75% on dividends falling within the basic rate band
• Higher rate: 33.75% on dividends falling within the higher rate band
• Additional rate: 39.35% on dividends above £125,140

These rates are significantly lower than the equivalent Income Tax rates on employment income (20%, 40%, 45%). That gap is what makes dividends attractive, even though the company has already paid Corporation Tax on the profits before distributing them.

How dividends interact with your tax bands

Dividends are added on top of your other income when calculating which tax band they fall into. This is important to understand.

If you take a salary of £12,570 (using your full Personal Allowance), that fills up the tax-free portion of your income. Any dividends you receive on top sit in the basic rate band first, then the higher rate band once your total income passes £50,270.

The first £500 of dividends falls within the dividend allowance (taxed at 0%), and the rest is taxed at the applicable rate depending on which band it lands in.

The salary-plus-dividends strategy

The most common approach for creator directors is:

1. Pay yourself a salary at or near the NI threshold. For 2025/26, many accountants recommend a salary of around £12,570 per year (the Personal Allowance). This means no Income Tax on the salary and no employee National Insurance. The employer NI threshold is slightly different, so your accountant may fine-tune the exact figure.

2. Take the rest as dividends. After the company has paid Corporation Tax on its remaining profits, you declare a dividend for whatever amount you want to withdraw.

A practical example

Suppose your company has a gross profit of £70,000 for the year (after deducting all business expenses but before Corporation Tax and your salary).

You pay yourself a salary of £12,570, reducing the company’s taxable profit to £57,430. Corporation Tax on that amount comes to approximately £10,561 (19% on the first £50,000 plus marginal relief on the remainder). That leaves roughly £46,869 available to distribute as dividends.

Your total personal income is now £59,439 (salary plus dividends). The salary uses your Personal Allowance, so the dividends sit in the basic and higher rate bands:

• First £500: covered by the dividend allowance at 0%.
• Next £37,200 (filling the basic rate band): taxed at 8.75% = £3,255.
• Remaining £9,169 (higher rate band): taxed at 33.75% = £3,095.

The total tax across the company and you personally comes to approximately £16,911. A sole trader on the same £70,000 profit would pay roughly £18,700. The saving is real, but factor in higher accountancy costs for a Ltd company (typically £1,000 to £2,500 per year more than sole trader filing).

Use our tax calculator to run your own numbers and see how the comparison works at your income level.

When dividends stop being efficient

The salary-plus-dividends approach works well when most of your dividends fall in the basic rate band. Once a significant portion lands in the higher rate band (33.75%), the combined effective rate including Corporation Tax approaches what you would pay as a sole trader. At the additional rate (39.35%), the combined burden can actually exceed sole trader rates in some scenarios.

At higher income levels, other strategies exist, such as retaining profits in the company or making pension contributions. These are complex and require proper advice from an accountant who understands your full financial picture.

Important rules to follow

• You can only pay dividends from accumulated profits after Corporation Tax. If the company does not have sufficient profits, you cannot declare a dividend.
• Each dividend payment should be documented with board minutes (even if you are the only director) and a dividend voucher.
• Dividends must be declared properly. Simply transferring money from your business account to your personal account without proper documentation is not the right way to do it.

Your accountant will handle the paperwork, but it is worth understanding the requirements so you do not accidentally create problems.

Getting the structure right

If you are already running a Ltd company or considering setting one up, understanding dividend tax is essential for making the structure work in your favour. For a walkthrough of the full Ltd company setup, see our Ltd company guide. If you are still deciding between sole trader and Ltd, our comparison guide lays out the pros and cons.

For tools to help you model different scenarios, try our tax calculator or earnings calculator. And if you want support with the business side while you focus on creating content, find out how we work or apply to work with us.

This article is for general information only and is not financial advice. Tax rules and rates can change. Always speak to a qualified accountant about your specific circumstances.