Question 1

What are the UK dividend tax rates for 2026/27?

Accepted Answer

For dividends received on or after 6 April 2026: basic rate 10.75% (was 8.75%), higher rate 35.75% (was 33.75%), additional rate 39.35% (unchanged). The £500 dividend allowance is unchanged. The 2 percentage point rise across basic and higher rates was announced in the Autumn 2025 Budget.

Question 2

How does the £500 dividend allowance work?

Accepted Answer

The first £500 of dividend income is tax-free regardless of which band you fall in. Importantly, it still uses up band space — so a basic-rate taxpayer who receives £500 of allowance-covered dividends still has £500 less of basic-rate band available for further dividends. The allowance was cut from £2,000 (2022/23) to £1,000 (2023/24) to £500 (2024/25) and remains at £500 for 2026/27.

Question 3

Do I pay dividend tax if my total income is below the personal allowance?

Accepted Answer

If your total income (salary + dividends + everything else) is below £12,570, your personal allowance covers it and you pay no dividend tax. If your salary alone uses up the personal allowance, the £500 dividend allowance applies on top, and any dividend above £500 is taxed at the basic-rate dividend rate (10.75% for 2026/27).

Question 4

How does dividend tax interact with my salary?

Accepted Answer

Dividends are stacked on top of your other income for band determination. The order is: personal allowance first (against salary), then your salary fills the basic-rate band, then dividends start where salary left off. So a £12,570 salary plus a £40,000 dividend means dividends occupy bands from £13,070 upward (after the £500 allowance), with most landing in the basic-rate band at 10.75%.

Question 5

What happens to my dividend tax if I cross £100,000 of total income?

Accepted Answer

The personal allowance starts to taper — £1 lost for every £2 of income above £100,000, reaching zero at £125,140. This effectively creates a marginal tax rate of around 53.75% on dividends between £100K and £125,140 (35.75% dividend rate + 18% PA-loss effect). Above £125,140 you also enter the additional-rate band at 39.35%. See the full guide for worked examples.

Question 6

Why did the dividend tax rates go up in April 2026?

Accepted Answer

The Autumn 2025 Budget set out the government's intention to align dividend taxation more closely with employment income taxation over time. The stated rationale is that the gap between income tax (20%) and dividend tax (then 8.75%) at the basic rate incentivises owner-managed businesses to structure remuneration as dividends rather than salary — reducing National Insurance receipts. The 2pp rise was projected to raise approximately £1.2 billion per year.

Question 7

How much dividend tax will I pay on £30,000 / £50,000 / £100,000?

Accepted Answer

Quick reference at 2026/27 rates with a standard £12,570 director salary: £30K dividend ≈ £3,170 tax (all basic-rate); £50K dividend ≈ £8,400 tax (basic + higher); £75K dividend ≈ £17,300 tax; £100K dividend ≈ £26,300 tax. Use the calculator above for your exact figures.

Band	Rate	Amount in band	Tax
Basic rate	10.75%	£37,200	£3,999
Higher rate	35.75%	£12,300	£4,397

Band	Rate	Amount in band	Tax
Basic rate	10.75%	£37,200	£3,999
Higher rate	35.75%	£12,300	£4,397

Dividend tax calculator: how much will you pay?

How this calculation works

Common questions.