From 6 April 2026, UK dividend tax went up. The basic and higher dividend rates each rose by 2 percentage points, while the £500 allowance stayed where it was. If you hold shares outside an ISA or pay yourself dividends from your own limited company, this is the year to recheck your numbers.
2026/27 dividend tax rates at a glance
| Band your dividends fall in | 2025/26 | 2026/27 |
|---|---|---|
| Dividend allowance | £500 at 0% | £500 at 0% |
| Basic rate (up to £50,270 total income) | 8.75% | 10.75% |
| Higher rate (£50,271 – £125,140) | 33.75% | 35.75% |
| Additional rate (over £125,140) | 39.35% | 39.35% |
The band thresholds are the same as for income tax, and they are frozen. The rates above apply in England, Wales, Scotland and Northern Ireland alike — Scotland's own income tax bands do not apply to dividends.
Dividends sit on top of everything else
The single most important rule: to decide which rate applies, HMRC stacks your dividends after your salary, pension, self-employed profit, rent and savings interest. So the same £4,000 of dividends can cost very different amounts depending on what else you earn.
Two details follow from this:
- Unused Personal Allowance covers dividends first. If your other income is below £12,570, the gap is used up by dividends before the £500 allowance even starts.
- The £500 allowance still uses up band. It is really a 0% rate, not an exemption, so those £500 still count towards the £50,270 basic-rate limit.
Three worked examples (2026/27)
Employee on £35,000 with £4,000 of dividends
Salary uses the Personal Allowance and £22,430 of the basic-rate band, leaving plenty of room. The first £500 is at 0%; the other £3,500 is taxed at 10.75% = £376.25.
Higher-rate earner on £80,000 with the same £4,000
The basic-rate band is already full, so after the £500 allowance the remaining £3,500 is taxed at 35.75% = £1,251.25 — more than three times Example 1.
Company director: £12,570 salary + £45,000 dividends
The salary exactly uses the Personal Allowance. That leaves £37,700 of basic-rate band for dividends:
| Slice of dividends | Rate | Tax |
|---|---|---|
| First £500 | 0% | £0 |
| Next £37,200 (rest of basic band) | 10.75% | £3,999.00 |
| Last £7,300 (higher band) | 35.75% | £2,609.75 |
| Total dividend tax | £6,608.75 |
Under 2025/26 rates the same split cost £5,718.75, so this director pays £890 more for 2026/27. That is before any corporation tax the company paid on the profits behind the dividends.
Plug in your own salary and dividends.
Use the UK Dividend Tax Calculator →Is salary + dividends still worth it for directors?
Usually yes, but the gap is narrower. Dividends still carry no National Insurance, whereas salary above the thresholds attracts employee NI and 15% employer NI. Against that, dividends come out of profit that has already paid 19%–25% corporation tax, and the 2026 rate rise trims the advantage further. If you are near £50,270 or £100,000 of total income, the exact split matters — see the cliff-edge notes in How to Reduce Your UK Tax Bill.
Watch the £100,000 line: dividends count towards adjusted net income, so they can trigger the Personal Allowance taper (£1 lost for every £2 over £100,000) just like salary.
How to keep dividends out of tax entirely
- ISAs. Dividends on shares and funds inside a Stocks & Shares ISA are tax-free and do not use your £500 allowance or your bands.
- Pensions. Dividends earned inside a SIPP or workplace pension are not taxed as they arise.
- Spouse or civil partner. Each person has their own £500 allowance and their own bands, so how shares are held between a couple can change the bill — the rules on genuine ownership apply.
How the tax is paid
Dividends arrive without tax deducted. If you already file a Self Assessment return, include them there; the tax is due by 31 January 2028 for the 2026/27 year. If you do not, and your dividends go above your unused Personal Allowance plus the £500 allowance, you need to tell HMRC — for smaller amounts it can often collect the tax through your PAYE tax code instead. New filers must register for Self Assessment by 5 October 2027. Our Self Assessment guide walks through the return.
Rates for the 2026/27 tax year (6 April 2026 – 5 April 2027) as published on GOV.UK. Salary/dividend planning for company directors depends on your full position — speak to an accountant before changing how you pay yourself.
Frequently asked questions
What is the dividend tax rate in the UK for 2026/27?
After the £500 dividend allowance, dividends 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 for 2026/27.
How much did dividend tax go up in April 2026?
The basic dividend rate rose from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. The additional rate stayed at 39.35% and the allowance stayed at £500.
Is the £500 dividend allowance tax-free?
Yes, the first £500 of dividends is taxed at 0%, but it still counts towards your income tax bands, so it can push other dividends into a higher band.
Do I pay tax on dividends in an ISA?
No. Dividends received inside an ISA are tax-free and do not use your dividend allowance.