Dividend Tax Guides 2026/27
In-depth UK dividend tax guides for contractors, investors, directors and retirees. All rates and allowances reflect the 2026/27 tax year.
Each card says what that guide adds. The newest guides come first, then the January Self Assessment pages, then the guides by situation and by tax band. For a figure rather than an explanation, the calculators are quicker; every example in these guides is worked out by the same engine.
How dividend tax works in 2026/27
Dividend income has its own tax rates, separate from the rates on salary or savings. Everyone gets a £500 tax-free dividend allowance for 2026/27. Above that, dividends are taxed at 10.75% while they fall in the basic-rate band, 35.75% in the higher-rate band, and 39.35% on income above £125,140.
Because dividends sit on top of your other income, the same dividend can be taxed at more than one rate — part at 10.75% and part at 35.75%, for example — depending on how much of your basic-rate band your salary has already used. These guides walk through the common situations: contractors and company directors balancing salary and dividends, investors living off portfolio income, and retirees drawing dividends alongside a pension. If your dividends are above your allowances but £10,000 or less and you do not file a tax return, you can have the tax collected through your tax code; above £10,000 you need Self Assessment.
Key dividend tax figures for 2026/27
The figures used throughout these guides and calculators. Dividend rates apply across the UK, including Scotland.
If you are new to dividend tax, start with the guide for your tax band, then use the salary and dividend split guide if you run a company. Investors should read the ISA guide first, because sheltering dividends is usually worth more than any other planning.
| Personal Allowance (reduced by £1 for every £2 of income over £100,000) | £12,570 |
| Dividend allowance | £500 |
| Basic dividend rate (taxable income up to £37,700) | 10.75% |
| Higher dividend rate (taxable income £37,701 to £125,140) | 35.75% |
| Additional dividend rate (taxable income above £125,140) | 39.35% |
| Report through Self Assessment if dividends exceed | £10,000 |
| ISA subscription limit (dividends inside are tax-free) | £20,000 |
Common mistakes these guides help you avoid
- Using last year's rates. The basic and higher dividend rates rose by 2 points on 6 April 2026, so a 2025/26 estimate understates the bill.
- Treating the £500 allowance as extra band. It is taxed at 0% but still uses up part of the basic-rate band, which can push later dividends into the higher rate.
- Forgetting the Personal Allowance taper. Between £100,000 and £125,140 of income, each extra £1 removes 50p of allowance, so dividends in that range cost far more than the headline rate.
- Missing the Self Assessment deadline. Dividends above £10,000 must be reported, and the online return for 2026/27 is due by 31 January 2028.
- Assuming Scottish rates apply to dividends. Scotland sets its own rates on earned income, but dividends are taxed at the UK dividend rates.