UK Dividend Tax Rates 2026/27
Rates by band and tax year, the £500 dividend allowance, and the tax on a given dividend
Dividend tax rates and allowance by tax year
| Tax year | Dividend allowance | Basic rate | Higher rate | Additional rate |
|---|---|---|---|---|
| 2026/27 | £500 | 10.75% | 35.75% | 39.35% |
| 2025/26 | £500 | 8.75% | 33.75% | 39.35% |
| 2024/25 | £500 | 8.75% | 33.75% | 39.35% |
| 2023/24 | £1,000 | 8.75% | 33.75% | 39.35% |
The four tax years HMRC publishes side by side. Rates apply to dividends paid on or after 6 April of the first year shown.
Which rate you actually pay
Dividends are taxed last. They sit on top of your other income, so the band they land in — and therefore the rate — depends on what you earned before them. With the standard £12,570 Personal Allowance, the basic rate band runs out at £50,270 of total income and the higher rate band at £137,710. A single dividend that crosses one of those points is split, with each part taxed at its own rate.
Two things catch people out. The £500 dividend allowance is not a deduction — dividends covered by it still use up band space, so they can push later dividends into the next band. And once total income passes £100,000, the Personal Allowance tapers away at £1 for every £2, which quietly raises the effective rate on dividends taken in that range.
Scottish taxpayers pay the UK dividend rates
Scottish Income Tax covers wages, pensions and most other taxable income, but GOV.UK is explicit that you pay the same tax as the rest of the UK on dividends and savings interest. The Scottish starter, intermediate, advanced and top rates never apply to dividends, and the bands above are the ones used — not the Scottish thresholds.
Tax on a dividend in 2026/27
Each column assumes the whole dividend falls inside that one band. Figures in brackets are the increase against 2025/26, which is what the 2-point rise costs on that amount.
| Dividend income | Basic rate (10.75%) | Higher rate (35.75%) | Additional rate (39.35%) |
|---|---|---|---|
| £1,000 | £53.75 (+£10.00) | £178.75 (+£10.00) | £196.75 |
| £2,000 | £161.25 (+£30.00) | £536.25 (+£30.00) | £590.25 |
| £5,000 | £483.75 (+£90.00) | £1,608.75 (+£90.00) | £1,770.75 |
| £10,000 | £1,021.25 (+£190.00) | £3,396.25 (+£190.00) | £3,738.25 |
| £20,000 | £2,096.25 (+£390.00) | £6,971.25 (+£390.00) | £7,673.25 |
The first £500 of every row is covered by the dividend allowance and taxed at 0%. The additional rate column assumes the Personal Allowance has already been fully tapered away. To model a dividend that straddles two bands, or a salary-plus-dividend mix, use the Dividend Tax Calculator.
The £500 dividend allowance
The dividend allowance is the slice of dividend income taxed at 0% each year, and it applies on top of any Personal Allowance you have not used. It has been cut repeatedly: it was still £1,000 in 2023/24 before falling to today's £500. Dividends held inside a stocks and shares ISA sit outside all of this — they are not taxed and do not consume the allowance.
If dividends are your only income, the Personal Allowance and the dividend allowance stack, so you can receive £13,070 before any dividend tax is due. Take a salary as well and the salary absorbs the Personal Allowance first, leaving only the £500 to shelter the dividends — the reason company directors model the two together rather than separately.
Worked example
HMRC's own example for 2026/27: you receive £3,000 in dividends and earn £29,570 in wages, a total income of £32,570. The £12,570 Personal Allowance leaves £20,000 of taxable income, all inside the basic rate band. So you pay 20% on £17,000 of wages, nothing on £500 of dividends because of the dividend allowance, and 10.75% on the remaining £2,500 of dividends — £268.75 of dividend tax.
The same example in 2025/26 produced £218.75 of dividend tax.
Frequently asked questions
What are the dividend tax rates for 2026/27?
Dividends above the £500 dividend allowance are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. The rate depends on which band the dividend falls into once it is stacked on top of your other income, so one dividend payment can be taxed at two different rates.
How much did dividend tax go up in April 2026?
The basic rate rose from 8.75% to 10.75% and the higher rate from 33.75% to 35.75% — 2 percentage points each, from 6 April 2026. The additional rate was left unchanged at 39.35%. The change was announced at the Autumn Budget 2025 and applies to dividends paid on or after 6 April 2026, not to the year they were declared in.
What is the dividend allowance for 2026/27?
£500. You pay no tax on the first £500 of dividend income each tax year, on top of any unused Personal Allowance. The allowance is not a deduction — the dividends it covers still use up band space, so they can push the rest of your dividends into a higher band.
Do Scottish taxpayers pay different dividend tax rates?
No. Scottish Income Tax applies to wages, pensions and most other taxable income, but GOV.UK states you pay the same tax as the rest of the UK on dividends and savings interest. The Scottish starter, intermediate, advanced and top rates do not apply to dividends, and neither do the Scottish band thresholds — dividends are taxed against the UK-wide basic and higher rate limits.
How much can I take in dividends before paying tax?
If dividends are your only income you can receive £13,070 before any tax is due — the £12,570 Personal Allowance plus the £500 dividend allowance. If you also take a salary, the salary uses the Personal Allowance first, so only the £500 allowance is left to shelter the dividends.
Are dividends inside an ISA taxable?
No. Dividends from shares held in a stocks and shares ISA are free of dividend tax however large they are, and they do not use up your dividend allowance. That is why the allowance cuts since 2023 have mattered most to investors holding shares outside a tax wrapper.
When do I have to tell HMRC about dividend income?
You need to report dividends to HMRC once they exceed both your unused Personal Allowance and the £500 dividend allowance. Most people do this through a Self Assessment return; if you do not already file one, HMRC can instead collect smaller amounts by adjusting your PAYE tax code.
Sources
Reflects 2026/27 dividend rates and the £500 dividend allowance, verified against gov.uk.
Related Calculators
Dividend Tax Calculator
Tax on dividends after the Dividend Allowance.
Director Salary vs Dividend Optimizer
Ltd company tax-efficient extraction — 8 salary levels compared: CT + employer NI + dividend tax + net retained.
UK Tax Brackets & Bands Reference
Every income tax band and rate for England/Wales/NI and Scotland, both tax years.