What is the dividend allowance for 2026/27?

The first £500 of dividends each tax year is tax-free (the dividend allowance). Dividends above that are taxed at 8.75% (basic), 33.75% (higher) or 39.35% (additional), depending on your Income Tax band.

Do dividends use my Personal Allowance?

Yes. Dividends are treated as the top slice of your income, so they sit above your salary and Personal Allowance. The tax rate that applies depends on your overall taxable income band.

How do I pay dividend tax?

Most people report dividends through Self Assessment and pay via the annual return. If you're an employee with small dividend income, HMRC may collect it through your tax code instead.

2026/27 Tax Year

Dividend Tax Calculator (UK)

Work out the tax on your dividends for 2026/27. The first £500 is tax-free, then you pay 8.75%, 33.75% or 39.35% depending on your Income Tax band. Model it in our calculator.

Dividend Tax Rates 2026/27

Dividends sit on top of your other income, so the rate follows your highest band.

Band	Dividend tax rate
First £500	0% (dividend allowance)
Basic rate	8.75%
Higher rate	33.75%
Additional rate	39.35%

💡 Worked example

🔧If your salary already uses your Personal Allowance and basic band, £2,000 of dividends means £500 free + £1,500 taxed at 8.75% = £131 tax. Higher-rate taxpayers pay 33.75% on the same slice.

Dividend Tax Tips

Use your allowance: the £500 is per person, per year — spouses can each use it.
Pension contributions: can pull you out of the higher band, cutting dividend tax.
Directors: a low salary + dividends mix is common but plan for the higher-rate hit above £50,270.