Answers · UK 2025/26
What is the dividend tax rate for 2026/27?
For 2026/27 the dividend tax rates are 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate) — the ordinary and upper rates rose by 2 percentage points from 6 April 2026 (Autumn 2025 Budget). The first £500 of dividends each year is tax-free under the dividend allowance. Dividends inside an ISA or pension are always tax-free regardless of amount.
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Dividend income in 2026/27 is taxed at three rates depending on which Income Tax band it falls into: 10.75% in the basic-rate band, 35.75% in the higher-rate band, and 39.35% in the additional-rate band. The ordinary (basic) and upper (higher) rates each rose by 2 percentage points from 6 April 2026 under the Autumn 2025 Budget (previously 8.75% and 33.75%); the additional rate is unchanged. Everyone gets a £500 dividend allowance — dividends within this are taxed at 0%, though they still use up part of your band. Dividends are treated as the top slice of income, stacked above salary, savings interest and rental income, so your other income determines which rates apply. Worked example: a director takes a £12,570 salary plus £40,000 in dividends. The salary uses the Personal Allowance. The first £500 of dividends is covered by the allowance. The next £37,200 (taking total income up to the £50,270 higher-rate threshold) is taxed at 10.75% = £3,999. The remaining £2,300 of dividends sits in the higher-rate band at 35.75% = £822. Total dividend tax = £4,821. The same rates apply across the whole UK, because dividend tax is not devolved to Scotland — only earned income uses Scottish bands. Dividends held within a Stocks and Shares ISA or a pension are completely tax-free and do not count toward the allowance. You must report dividends via Self Assessment if they exceed £10,000, or if you are a higher- or additional-rate taxpayer with dividend income. Use the Dividend Tax calculator to find the most tax-efficient salary and dividend split.
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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.