What is the dividend allowance and what are the dividend tax rates?
The dividend allowance is £500 a year, and you only pay tax on dividend income above it. In 2025/26 the rates on dividends above the allowance are 8.75% basic, 33.75% higher and 39.35% additional. In 2026/27 they are 10.75%, 35.75% and 39.35%.
Figures checked against gov.uk on . General information, not tax advice.
At a glance
- Dividend allowance (both years)
- £500
- Basic rate 2025/26 / 2026/27
- 8.75% / 10.75%
- Higher rate 2025/26 / 2026/27
- 33.75% / 35.75%
- Additional rate (both years)
- 39.35%
When you must report dividends
gov.uk says you need to report dividends to HMRC if your dividend payments are over both your unused Personal Allowance and your dividend allowance. Dividends covered by your unused Personal Allowance or by the dividend allowance are not taxed.
Dividends are added to your other income to decide which band they fall in, and different parts can be taxed at different rates.
Which year's rate applies
The rate depends on the tax year in which you receive the dividend. A 2025/26 return, due by 31 January 2027, uses the lower 2025/26 rates, while a dividend paid after 5 April 2026 is taxed at the 2026/27 rates.
Dividends from shares held in an ISA are not taxed.