Dividend Allowance
The amount of dividend income you can receive each tax year completely free of tax, currently set at £500. The allowance is available to all UK taxpayers regardless of the rate band they fall into. Dividends above the allowance were taxed at 8.75% (basic), 33.75% (higher), and 39.35% (additional) for 2025/26. From 6 April 2026 the basic rate rose to 10.75% and the higher rate to 35.75%; the additional rate is unchanged at 39.35%.
Related Terms
Dividend Tax
Tax payable on dividend income received from shares in UK and overseas companies, above the Dividend Allowance.
Dividend Tax Rates
The rates at which dividends are taxed in excess of the Dividend Allowance.
Basic Rate
The standard income tax rate of 20% applied to taxable income between the Personal Allowance and the higher-rate threshold, currently £12,571 to £50,270 in England, Wales, and Northern Ireland.
Higher Rate
The income tax rate of 40% applied to taxable income above £50,270 up to £125,140 in England, Wales, and Northern Ireland.
Additional Rate
The highest income tax rate in England, Wales, and Northern Ireland, charged at 45% on taxable income above £125,140.
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