Answers · UK 2025/26
What is the Dividend Allowance for 2026/27?
The Dividend Allowance is £500 in 2026/27 (reduced from £2,000 in 2022/23 and £1,000 in 2023/24). Dividends above £500 are taxed at 8.75% (basic), 33.75% (higher) or 39.35% (additional rate).
Full answer
The Dividend Allowance for 2026/27 is £500, meaning the first £500 of dividend income is tax-free. This has been cut sharply: from £5,000 (2017–2018), to £2,000 (2018–2023), to £1,000 (2023/24), to £500 (2024/25 onwards). Dividends above the £500 allowance are taxed at: 8.75% (basic rate — income up to £50,270), 33.75% (higher rate — £50,271 to £125,140) or 39.35% (additional rate — above £125,140). In Scotland, the dividend rates and allowance are set by Westminster, not Holyrood — Scottish taxpayers pay the same dividend tax rates as the rest of the UK. Dividends received within an ISA or pension are entirely tax-free. Business owners paying themselves via dividends should compare this to salary to optimise their overall tax. Use the Dividend Tax calculator to model your liability at any level of dividend income.
Try the calculator
More answers
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.