UK Dividend Tax Rates 2026/27
The complete reference for UK dividend tax in 2026/27: 10.75% basic, 35.75% higher and 39.35% additional1, with the £500 allowance and a £12,570 Personal Allowance2. The rate you actually pay isn't set by the dividend size — it's set by where the dividends land once your salary has filled the bands. Here are all the numbers, the history, and a worked example.
UK dividend tax rates for 2026/27 are 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate)1, unchanged from 2025/26. The first £500 is covered by the dividend allowance and taxed at 0%. Which rate you pay depends on your total income — dividends stack on top of your salary — and dividends carry no National Insurance. Personal Allowance £12,570; basic-rate limit £50,2702.
- 2026/27 dividend rates: 10.75% / 35.75% / 39.35%1 — no change from 2025/26.
- The £500 allowance is taxed at 0%1 but still uses up part of the band it sits in.
- Dividends stack on top of salary2, so your salary decides which rate each dividend pound meets.
- Dividend rates sit below income-tax rates because company profit is taxed by Corporation Tax first4.
- The allowance has fallen from £5,000 (2016/17) to £500 today3 — a big real-terms cut for unwrapped investors.
UK dividend tax rates for 2026/27 are 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate), unchanged from 2025/26. The first £500 is covered by the dividend allowance and taxed at 0%. Which rate you pay depends on your total income — dividends stack on top of your salary — and dividends carry no National Insurance. Personal Allowance £12,570; basic-rate limit £50,270.
2026/27 dividend tax rates at a glance
| Band | Total income range | Dividend tax rate |
|---|---|---|
| Allowance | First £500 of dividends | 0% |
| Basic rate | Up to £50,270 total income | 10.75% |
| Higher rate | £50,271, £125,140 | 35.75% |
| Additional rate | Above £125,140 | 39.35% |
These rates apply to dividends received from 6 April 2026. The rates are unchanged from 2025/26. Personal Allowance: £12,5702.
Worked example — dividends across two bands
A director takes a £12,570 salary (using the full Personal Allowance) and £40,000 of dividends. The dividends fill what's left of the basic-rate band, then spill into the higher rate. Watch the £500 allowance use up part of the basic band rather than adding to it:
| Salary (covered by Personal Allowance) | £12,570 |
| Dividends | £40,000 |
| Dividend allowance (0%, uses £500 of the basic band) | £500 |
| Basic-rate band left for dividends (£37,700 − £500) | £37,200 |
| £37,200 taxed at 10.75% | £3,999.00 |
| Remaining £2,300 taxed at 35.75% (higher rate) | £822.25 |
| Total dividend tax | £4,821.25 |
Because the £500 allowance sits inside the basic band, only £37,200 — not £37,700 — is taxed at 10.75%, which pushes an extra £500 of dividends up into the 35.75% band. That single detail is what many quick estimates get wrong.
Why dividend tax rates are lower than income tax rates
Dividends are paid from company profits that have already been taxed at 19% or 25% corporation tax. The government treats this as a form of double taxation and sets dividend rates lower to partially offset it — hence 10.75% rather than 20%, and 35.75% rather than 40%.
But the rates are not simply income tax minus corporation tax. The effective combined rate — corporation tax plus dividend tax — is still significant, especially at higher and additional rate levels.
Tax year comparison: how rates have changed
| Tax year | Basic | Higher | Additional | Allowance |
|---|---|---|---|---|
| 2016/17, 2021/22 | 7.5% | 32.5% | 38.1% | £5,000 → £2,000 |
| 2022/23 | 10.75% | 35.75% | 39.35% | £2,000 |
| 2023/24 | 10.75% | 35.75% | 39.35% | £1,000 |
| 2024/25 | 10.75% | 35.75% | 39.35% | £500 |
| 2025/26 | 10.75% | 35.75% | 39.35% | £500 |
| 2026/27 (current) | 10.75% | 35.75% | 39.35% | £500 |