{"id":39201,"date":"2026-07-01T11:24:09","date_gmt":"2026-07-01T10:24:09","guid":{"rendered":"https:\/\/figsflow.com\/uk\/?p=39201"},"modified":"2026-07-01T11:33:11","modified_gmt":"2026-07-01T10:33:11","slug":"dividend-tax-rates-2026-27","status":"publish","type":"post","link":"https:\/\/figsflow.com\/uk\/dividend-tax-rates-2026-27\/","title":{"rendered":"Dividend Tax Rates & Allowance 2026\/27: The Accountant\u2019s Quick-Reference Guide\u00a0"},"content":{"rendered":"\t\t
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From 6 April 2026, the basic and upper dividend tax rates each rose by 2 percentage points. For the 2026\/27 tax year, UK dividend tax rates\u00a0remain\u00a0an important consideration for tax planning. The rates are\u00a0<\/span>10.75% for basic rate taxpayers,\u00a035.75% for higher rate taxpayers, and 39.35% for\u00a0additional\u00a0rate taxpayers<\/span><\/b>, after\u00a0taking into account\u00a0the dividend allowance.<\/span>\u00a0<\/span><\/p>

This guide provides a quick reference for accountants, including the latest dividend tax rates, allowance details, examples, and practical points to consider when advising clients.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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What Changed in the Dividend Tax Rates for 2026\/27? <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
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The basic and upper rates went up 2 points. The\u00a0<\/span>additional<\/span>\u00a0rate and the allowance stayed the same.<\/span>\u00a0These changes mean accountants need to review how the latest\u00a0<\/span>dividend tax rates for 2026\/27<\/span>\u00a0affect clients who extract profits through dividends rather than salary.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Band<\/th>\n 2025\/26 rate<\/th>\n 2026\/27 rate<\/th>\n Change<\/th>\n <\/tr>\n <\/thead>\n
Basic<\/td>\n 8.75%<\/td>\n 10.75%<\/td>\n +2 points<\/td>\n <\/tr>\n
Higher<\/td>\n 33.75%<\/td>\n 35.75%<\/td>\n +2 points<\/td>\n <\/tr>\n
Additional<\/td>\n 39.35%<\/td>\n 39.35%<\/td>\n No change<\/td>\n <\/tr>\n
Dividend allowance<\/td>\n \u00a3500<\/td>\n \u00a3500<\/td>\n No change<\/td>\n <\/tr>\n <\/tbody>\n <\/table>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
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The change was confirmed at the Autumn 2025 Budget and started on 6 April 2026. The same rates apply across England,\u00a0Wales\u00a0and Northern Ireland. Scottish taxpayers also pay these UK-wide dividend rates, even though their other income follows Scottish bands.<\/span>\u00a0<\/span><\/p>

Source<\/span>:\u00a0<\/span>Changes to tax rates for property, savings and dividend income, GOV.UK<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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How Much Is the Dividend Allowance for 2026\/27? <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
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The dividend allowance is\u00a0\u00a3500 for 2026\/27, the same as the two years before it.\u00a0While the allowance\u00a0remains\u00a0unchanged, the increase in dividend tax rates means clients receiving dividends above this threshold may face a higher tax liability.<\/span>\u00a0<\/span><\/p>

The allowance is taxed at 0%, but it still uses up \u00a3500 of your band. It does not give you extra basic-rate room. A higher-rate client uses their \u00a3500 at the higher-rate point, where their income already sits, not back at the basic\u00a0rate.<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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How Do You Apply the Dividend Tax Rates? <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Dividends are taxed last, after your other income has filled the bands below.<\/span>\u00a0<\/span><\/p>

The order is fixed, salary,\u00a0pension\u00a0and rental income first, then savings income, then dividends on top. The band a dividend lands in depends on everything below it, not on how big the dividend is.<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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Method of Calculating Dividend Tax <\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
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  • Add the dividends to all other income to find the total and the bands in play<\/span>\u00a0<\/span><\/li><\/ul>
    • Use the Personal Allowance against other income first, then against dividends if any is left<\/span>\u00a0<\/span><\/li><\/ul>
      • Take off the \u00a3500 dividend allowance, taxed at 0%<\/span>\u00a0<\/span><\/li><\/ul>
        • Apply the relevant dividend tax rate, 10.75%, 35.75% or 39.35% \u2014 to the remaining dividends depending on which tax band they fall into<\/span>\u00a0<\/span><\/li><\/ul>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
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          \n\t\t\t\t\t\t\n\t\t\t\t\t\t\tWorked Example \t\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/p>\n\t\t\t\t\n\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

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          Priya runs a consultancy through her own company. She pays herself a <\/span>\u00a3<\/span>30,000 salary, earns <\/span>\u00a3<\/span>2,000 in interest on a business savings account held personally, and draws <\/span>\u00a3<\/span>20,000 in dividends across the year. All three sources stack <\/span>in order to<\/span> set the rate on her dividends.<\/span><\/span> <\/span><\/i><\/p>

          Computation<\/span><\/b> <\/span><\/p><\/td>

          Non saving(Salary)<\/span><\/b> <\/span><\/p><\/td>

          Savings<\/span><\/b> <\/span><\/p><\/td>

          Dividends<\/span><\/b> <\/span><\/p><\/td>

          Total<\/span><\/b> <\/span><\/p><\/td><\/tr>

           <\/span><\/p><\/td>

          \u00a3<\/span> <\/span><\/p><\/td>

          \u00a3<\/span> <\/span><\/p><\/td>

          \u00a3<\/span> <\/span><\/p><\/td>

          \u00a3<\/span> <\/span><\/p><\/td><\/tr>

          Income<\/span> <\/span><\/p><\/td>

          30000<\/span> <\/span><\/p><\/td>

          2000<\/span> <\/span><\/p><\/td>

          20000<\/span> <\/span><\/p><\/td>

          52000<\/span> <\/span><\/p><\/td><\/tr>

          Less: Personal allowance<\/span> <\/span><\/p><\/td>

          (12570)<\/span> <\/span><\/p><\/td>

           <\/span><\/p><\/td>

           <\/span><\/p><\/td>

          (12570)<\/span> <\/span><\/p><\/td><\/tr>

          Taxable income<\/span><\/b> <\/span><\/p><\/td>

          17430<\/span><\/b> <\/span><\/p><\/td>

          2000<\/span><\/b> <\/span><\/p><\/td>

          20000<\/span><\/b> <\/span><\/p><\/td>

          39430<\/span><\/b> <\/span><\/p><\/td><\/tr>

          Taxed at 0%<\/span> <\/span><\/p><\/td>

           <\/span><\/p><\/td>

          1000<\/span> <\/span><\/p><\/td>

          500<\/span> <\/span><\/p><\/td>

          1500<\/span> <\/span><\/p><\/td><\/tr>

          Taxed at 20%<\/span> <\/span><\/p><\/td>

          17430<\/span> <\/span><\/p><\/td>

          1000<\/span> <\/span><\/p><\/td>

           <\/span><\/p><\/td>

          18430<\/span> <\/span><\/p><\/td><\/tr>

          Taxed at 10.75%<\/span> <\/span><\/p><\/td>

           <\/span><\/p><\/td>

           <\/span><\/p><\/td>

          17770<\/span> <\/span><\/p><\/td>

          17770<\/span> <\/span><\/p><\/td><\/tr>

          Taxed at 35.75%<\/span> <\/span><\/p><\/td>

           <\/span><\/p><\/td>

           <\/span><\/p><\/td>

          1730<\/span> <\/span><\/p><\/td>

          1730<\/span> <\/span><\/p><\/td><\/tr><\/tbody><\/table>

          The grid shows how each income type fills the bands. The working below shows where each tax figure comes from.<\/span><\/span> <\/span><\/p>

          Slice<\/span><\/b> <\/span><\/p><\/td>

          Amount \u00d7 rate<\/span><\/b> <\/span><\/p><\/td>

          Tax<\/span><\/b> <\/span><\/p><\/td><\/tr>

          Salary, basic rate<\/span> <\/span><\/p><\/td>

          \u00a317,430 \u00d7 20%<\/span> <\/span><\/p><\/td>

          \u00a33,486.00<\/span> <\/span><\/p><\/td><\/tr>

          Savings, Personal Savings Allowance<\/span> <\/span><\/p><\/td>

          \u00a31,000 \u00d7 0%<\/span> <\/span><\/p><\/td>

          \u00a30.00<\/span> <\/span><\/p><\/td><\/tr>

          Savings, basic rate<\/span> <\/span><\/p><\/td>

          \u00a31,000 \u00d7 20%<\/span> <\/span><\/p><\/td>

          \u00a3200.00<\/span> <\/span><\/p><\/td><\/tr>

          Dividends, allowance<\/span> <\/span><\/p><\/td>

          \u00a3500 \u00d7 0%<\/span> <\/span><\/p><\/td>

          \u00a30.00<\/span> <\/span><\/p><\/td><\/tr>

          Dividends, basic-rate band<\/span> <\/span><\/p><\/td>

          \u00a317,770 \u00d7 10.75%<\/span> <\/span><\/p><\/td>

          \u00a31,910.27<\/span> <\/span><\/p><\/td><\/tr>

          Dividends, higher-rate band<\/span> <\/span><\/p><\/td>

          \u00a31,730 \u00d7 35.75%<\/span> <\/span><\/p><\/td>

          \u00a3618.48<\/span> <\/span><\/p><\/td><\/tr>

          Total income tax<\/span><\/b> <\/span><\/p>

           <\/span><\/p><\/td>

           <\/span><\/p><\/td>

          \u00a36,214.75<\/span><\/b> <\/span><\/p><\/td><\/tr><\/tbody><\/table>

          Read the grid left to right in stacking order. Salary fills the basic-rate band first, savings sit on top of it, and the dividends take what basic-rate room is left before the rest crosses into the higher rate. Of the <\/span>\u00a3<\/span>6,214.75 total, the dividends account for <\/span>\u00a3<\/span>2,528.75.<\/span><\/span> <\/span><\/p>

          Note<\/u><\/b>:<\/span><\/span> The <\/span>\u00a3<\/span>2,000 of savings interest is not taxed at the dividend rate. The <\/span>\u00a3<\/span>1,000 Personal Savings Allowance covers half at <\/span>0%<\/span> and the rest is taxed at 20%. It still matters here, because all <\/span>\u00a3<\/span>2,000 fills basic-rate band and pushes more of the dividends towards the higher rate.<\/span><\/span><\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\n\t\t\n\t\t\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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          When Must You Report Dividends to HMRC? <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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          It depends on how much the client received in dividends, and on whether they already file a tax return.<\/span>\u00a0<\/span><\/p>

          A client whose dividends are within the\u00a0\u00a3500 allowance has nothing to report. Once dividends go above the allowance, there is tax to pay and HMRC must be told every year it arises.<\/span>\u00a0<\/span><\/p>

          Dividend income for the year<\/span><\/b>\u00a0<\/span><\/p><\/td>

          Action<\/span><\/b>\u00a0<\/span><\/p><\/td><\/tr>

          Within the\u00a0\u00a3500 allowance<\/span>\u00a0<\/span><\/p><\/td>

          Nothing to report.<\/span>\u00a0<\/span><\/p><\/td><\/tr>

          Up to\u00a0\u00a310,000<\/span>\u00a0<\/span><\/p><\/td>

          Tell HMRC. If the client already files\u00a0Self Assessment, report it on the return. If not, ask HMRC to update the tax code so the tax comes from wages or pension, or contact the HMRC helpline.<\/span>\u00a0<\/span><\/p><\/td><\/tr>

          Over\u00a0\u00a310,000<\/span>\u00a0<\/span><\/p><\/td>

          Fill in a\u00a0Self Assessment\u00a0return.<\/span>\u00a0<\/span><\/p><\/td><\/tr><\/tbody><\/table>

          A client who already sends a\u00a0Self Assessment\u00a0return, for self-employment or any other reason, reports all dividend income on that return. A client who does not usually file and needs to report must tell HMRC by 5 October after the end of the tax year the dividends fell in. For dividends over\u00a0\u00a310,000, that means registering for\u00a0Self Assessment\u00a0by the same 5 October date.<\/span>\u00a0<\/span><\/p>

          For example,<\/span> a director who first draws dividends above the allowance in the 2025\/26 tax year, which ran from 6 April 2025 to 5 April 2026, must tell HMRC by 5 October 2026, then file and pay by 31 January 2027.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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          How Do You Pay the Dividend Tax You Owe? <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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          Once the dividend tax rates have been applied and the bill is known, how the client pays depends on whether they file\u00a0<\/span>Self Assessment<\/span>.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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          Paying Through Your Tax Code <\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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          A PAYE client whose whole\u00a0<\/span>Self Assessment<\/span>\u00a0bill is under\u00a0<\/span>\u00a3<\/span>3,000 can have the tax collected through their tax code, taken from salary or pension across the next year. This needs the online return filed by 30 December, not 31 January, and enough PAYE income for HMRC to collect against.<\/span><\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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          Paying With a Self Assessment Return <\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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          Everyone else pays with the return. The options are online or telephone banking, a single Direct Debit, a debit or corporate credit card, or a cheque (the Post Office route has closed). Larger bills also bring payments on account, due 31\u00a0<\/span>January<\/span>\u00a0and 31 July, unless last year’s bill was under\u00a0<\/span>\u00a3<\/span>1,000 or more than 80% of the tax was already collected at source.<\/span><\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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          Dividend tax rates\u00a0remain\u00a0a key consideration for UK accountants supporting directors and shareholders.\u00a0With changes to\u00a0dividend tax rates for 2026\/27, accountants need to\u00a0provide\u00a0clear guidance on how dividend income interacts with salary,\u00a0savings\u00a0and other taxable income.<\/span>\u00a0<\/span><\/p>

          A practical approach\u00a0combining\u00a0accurate\u00a0calculations,\u00a0timely\u00a0advice, and easy-to-share resources helps accountants provide better support while helping clients make informed decisions about profit extraction.<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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          FAQs<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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          For 2026\/27, dividends above the\u00a0<\/span>\u00a3<\/span>500 allowance are taxed at 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band. The basic and upper rates each rose 2 points from 6 April 2026.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t

          \n\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tAre dividends taxable in the UK? \t\t\t\t\t\t\t<\/span>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t
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          Yes. Dividends from UK company shares are taxable income, but the first\u00a0\u00a3500 each year is covered by the dividend allowance and taxed at 0%. Dividends above\u00a0\u00a3500 are taxed at the dividend rates. Dividends held inside an ISA stay tax-free and do not count towards the allowance.<\/span>\u00a0<\/span><\/p>

          \u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t

          \n\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tWhat is the UK dividend allowance?\t\t\t\t\t\t\t<\/span>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t
          \n\t\t\t\t\t\t\t

          The dividend allowance is\u00a0<\/span>\u00a3<\/span>500 for 2026\/27, unchanged from 2025\/26. The first\u00a0<\/span>\u00a3<\/span>500 of dividends each year is taxed at 0%. It is a nil-rate band, not a deduction, so it still uses up\u00a0<\/span>\u00a3<\/span>500 of whichever rate band your income sits in. It was\u00a0<\/span>\u00a3<\/span>5,000 in 2017\/18.<\/span><\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t

          \n\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tHow does HMRC know my dividend income? \t\t\t\t\t\t\t<\/span>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t
          \n\t\t\t\t\t\t\t

          HMRC has no automatic feed of dividends from private companies, so the duty to report sits with you. You declare them on a\u00a0<\/span>Self Assessment<\/span>\u00a0return, or by asking HMRC to adjust your tax code for smaller amounts. HMRC can cross-check against company filings, bank\u00a0<\/span>data<\/span>\u00a0and dividend vouchers, so under-reporting carries real risk.<\/span><\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

          \n\t\t\t\t
          \n\t\t\t\t\t\t\t\t\t

          Additional\u00a0resources\u00a0<\/strong><\/h2>