Dividend Tax Rates
The rates at which dividends are taxed in excess of the Dividend Allowance. From 6 April 2026 the rates are 10.75% (basic), 35.75% (higher) and 39.35% (additional) — the basic and higher rates rose 2 percentage points in the Autumn Budget 2025. For 2025/26 the rates were 8.75%, 33.75% and 39.35%. Dividend rates remain below the equivalent income tax rates on employment income because the underlying profits were already subject to Corporation Tax. Company directors and shareholders often need to balance salary and dividends to optimise their overall tax position, and the 2pp rise has narrowed the Ltd-company tax advantage at basic and higher rate levels.
Related Terms
Dividend Tax
Tax payable on dividend income received from shares in UK and overseas companies, above the Dividend Allowance.
Dividend Allowance
The amount of dividend income you can receive each tax year completely free of tax, currently set at £500.
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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