The UK dividend tax rates for 2026/27 are 10.75% at the basic rate, 35.75% at the higher rate, and 39.35% at the additional rate, applied to dividend income above a £500 tax-free allowance. The basic and higher rates each rose by 2 percentage points from 6 April 2026; the additional rate is unchanged. These rates apply to all dividends received between 6 April 2026 and 5 April 2027, from UK or overseas companies.1GOV.UK. Changes to Tax Rates for Property, Savings and Dividend Income
The 2026/27 Rates and Allowance
The first £500 of dividend income is tax-free for everyone, regardless of which band you fall into. Above that, the rate depends on your total taxable income:
- Basic rate, income up to £50,270: 10.75% (up from 8.75%)
- Higher rate, income from £50,271 to £125,140: 35.75% (up from 33.75%)
- Additional rate, income above £125,140: 39.35% (unchanged)
The £500 dividend allowance is a personal figure, not a per-account one. All your dividends from every share, fund, and platform are pooled against the same £500 threshold. Dividends paid inside an ISA sit outside the system entirely and do not count toward the allowance.2GOV.UK. Tax on Dividends
The dividend allowance is separate from the £12,570 Personal Allowance. If dividends are your only income, you can receive up to £13,070 before any dividend tax is due.
How Your Other Income Decides the Rate
HMRC treats dividends as the top slice of your income. Your salary, pension, rental profits, and self-employment earnings fill the tax bands first, and the Personal Allowance is usually absorbed by those sources. Whatever basic rate band is left over gets used up by dividends before they spill into the higher band.3GOV.UK. Income Tax Rates and Personal Allowances
A worked example. Your salary is £45,000. After the £12,570 Personal Allowance, £32,430 sits in the basic rate band, leaving £17,840 of basic rate space free (the band runs up to £50,270). You then take £20,000 in dividends. The first £500 is covered by the dividend allowance. Of the remaining £19,500, the next £17,840 is taxed at 10.75%, and the final £1,660 falls into the higher band and is taxed at 35.75%.
If your salary alone already exceeds £50,270, every pound of dividend income beyond the £500 allowance is taxed at 35.75%. Once total income crosses £125,140, the excess is taxed at 39.35%.1GOV.UK. Changes to Tax Rates for Property, Savings and Dividend Income
The £100,000 Personal Allowance Taper
Once your total income exceeds £100,000, HMRC withdraws £1 of Personal Allowance for every £2 of income above the threshold. By £125,140 the whole £12,570 is gone.3GOV.UK. Income Tax Rates and Personal Allowances
Dividend income counts toward that £100,000 figure. A director paying themselves a small salary and topping up with dividends can trigger the taper without noticing. Between £100,000 and £125,140 the effective marginal rate lands around 60%, because you lose tax-free allowance at the same time as paying higher rate tax. If your total income sits anywhere near £100,000, model an extra dividend before declaring it.
Scottish Taxpayers
Dividend tax rates are set UK-wide, so 10.75%, 35.75%, and 39.35% apply the same way in Scotland as they do in the rest of the UK. The Scottish income tax bands still matter, though, because they change where your non-dividend income sits, and that changes how much basic rate space remains for your dividends to fill under the stacking rules.
Reporting and Paying What You Owe
What you have to do depends on the size of the dividend income.
Dividends of £500 to £10,000
If your dividends are within this range and you do not already complete a Self Assessment return, you can either ask HMRC to adjust your PAYE tax code so the tax comes out of your wages or pension, or phone the income tax helpline. Notify HMRC after the end of the tax year on 5 April and before 5 October.4GOV.UK. Tax on Dividends – How to Report Tax on Dividends
Dividends Over £10,000
You must file a Self Assessment tax return. The online system calculates the tax due once you enter your total dividends and other income.5GOV.UK. File Your Self Assessment Tax Return Online The online return and any tax owed are due by 31 January after the tax year ends, so for 2026/27 that is 31 January 2028. A missed deadline is an automatic £100 penalty even when no tax is owed, and further charges build up the longer the return sits.6GOV.UK. Self Assessment Tax Returns – Penalties
Payments on Account
If your Self Assessment bill is over £1,000 and less than 80% of your total tax comes out at source through PAYE, HMRC will require payments on account: two advance instalments toward the next year’s bill, each half of the previous year’s liability, due on 31 January and 31 July. This catches directors out in their second year of dividend drawings, because the January payment covers the balance of the year just ended and the first instalment of the year ahead in one hit.