Guide · rates checked against the Finance Act 2026
Dividend tax rates 2026/27
Two of the three dividend rates rose on 6 April 2026. Here is what each band now pays, who lands in which band, and what the rise costs in real money.
The rates, this year against last
| Band | 2026/27 | 2025/26 | Change |
|---|---|---|---|
| Dividend allowance | £500 at 0% | £500 at 0% | No change |
| Basic rate | 10.75% | 8.75% | +2.00pp |
| Higher rate | 35.75% | 33.75% | +2.00pp |
| Additional rate | 39.35% | 39.35% | No change |
The Finance Act 2026 added 2 percentage points to the basic and higher dividend rates from 6 April 2026. The additional rate stayed put, and so did the £500 dividend allowance. The first £500 of dividends is still taxed at 0% whichever band you are in, though it does use up band space.
These rates sit well above where they were a few years ago. Before April 2022 the basic dividend rate was 7.5%. It is now 10.75%: a rise of more than 40% in the rate itself within five tax years.
Which band are you in?
Dividends are taxed as the top slice of your income. Salary, pension and rental income fill the tax bands from the bottom; your dividends stack on top and take whatever rate applies at that height. So the band that matters is set by your total income, not by the dividends alone.
| Band | Total income | Dividend rate |
|---|---|---|
| Basic rate | Total income up to £50,270 | 10.75% |
| Higher rate | £50,271 to £125,140 | 35.75% |
| Additional rate | Above £125,140 | 39.35% |
Income thresholds assume the standard £12,570 personal allowance. Above £100,000 the allowance shrinks by £1 for every £2 of income, which quietly pushes more of your dividends into tax. A payout that straddles a threshold is split, with each part taxed at its own rate.
One worked example per band
Three people, each with £10,000 of dividends in 2026/27. Only the income underneath changes.
Basic rate: £12,570 salary + £10,000 dividends
- Salary covered by the personal allowance£12,570
- Dividend allowance at 0%£500 · £0.00
- £9,500 in the basic band at 10.75%£1,021.25
- Dividend tax due£1,021.25
In 2025/26 the same setup cost £831.25 at 8.75%. The rise adds £190 a year: exactly 2% of the £9,500 that is actually taxed.
Higher rate: £60,000 salary + £10,000 dividends
- Salary fills the allowance and the whole basic band£60,000
- Dividend allowance at 0%£500 · £0.00
- £9,500 in the higher band at 35.75%£3,396.25
- Dividend tax due£3,396.25
Last year: £3,206.25 at 33.75%. Again £190 more, because the same 2 points went on the higher rate.
Additional rate: £130,000 salary + £10,000 dividends
- Personal allowance fully tapered away£0
- Dividend allowance at 0%£500 · £0.00
- £9,500 in the additional band at 39.35%£3,738.25
- Dividend tax due£3,738.25
Identical to last year. The additional rate did not move, so the highest earners saw no change on this slice. Run your own numbers in the dividend tax calculator, which splits payouts across bands automatically.
Why the additional rate was left alone
At 39.35%, the additional dividend rate was already close to the ceiling of what dividends can reasonably bear next to other ways of taking income. Raising the two lower rates instead spreads the burden across far more taxpayers: most dividend income in the UK is received by people in the basic and higher bands, not by additional rate payers.
The side effect is a narrower gap at the top. In 2025/26 the step from higher to additional rate was 5.6 percentage points (33.75% to 39.35%). In 2026/27 it is 3.6 (35.75% to 39.35%). Crossing £125,140 now stings a little less than it did, while the jump from basic to higher rate remains the big one: 25 points, from 10.75% to 35.75%.
A note for Scotland
Scottish income tax bands apply to salary and other earned income, and they differ from the rest of the UK. Dividends are the exception. Dividend rates, the dividend allowance and the bands used to tax dividends are all set at UK level, so a company director in Glasgow pays the same dividend tax as one in Manchester on the same figures. Only the tax on the salary underneath would differ.
Common questions
What is the dividend tax rate for 2026/27?
It depends on your income tax band. Above the £500 allowance, dividends 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 first two rates rose by 2 percentage points on 6 April 2026.
Did dividend tax go up in April 2026?
Yes. The Finance Act 2026 raised the basic dividend rate from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. The additional rate stayed at 39.35% and the £500 allowance was untouched.
How do I know which dividend rate I pay?
Stack your dividends on top of your other income. Whatever band that top slice lands in sets the rate. Total income up to £50,270 means 10.75%, up to £125,140 means 35.75%, and above that 39.35%. A single payout can straddle two bands and pay both rates.
Are dividend tax rates different in Scotland?
No. Scotland sets its own income tax bands for salary, but dividend rates and the bands used for dividends are decided at UK level. A Scottish taxpayer pays the same 10.75%, 35.75% and 39.35% as one in England.
Do the new rates apply to dividends in an ISA or pension?
No. Dividends earned inside a stocks and shares ISA or a pension carry no dividend tax at all, at any rate, and they do not use up the £500 allowance. The April 2026 rise changed nothing for them.
Wondering how much escapes tax entirely? See how much dividend is tax free for the £500 allowance in detail, or put your own salary and dividends into the calculator.