Dividend Tax Just Rose 2% — What It Means for Your Investments
Dividend tax rose 2% from April 2026 for basic and higher rate taxpayers. Here's how much more you'll pay and the smartest ways to reduce the hit.
CT
Chandraketu Tripathi
Finance Editor, Kaeltripton
Published3 Apr 2026
Last reviewed11 May 2026
✓ Fact-checked
Illustrative image. AI-generated and does not depict real people, places or events.
Advertisement
Tax Change — April 2026
From 6 April 2026, dividend tax rates have increased for basic and higher rate taxpayers. If you hold shares outside an ISA, receive dividend income from a limited company, or own investment funds, you will pay more tax on that income this year.
The New Dividend Tax Rates
Tax Band
2025/26 Rate
2026/27 Rate
Change
Basic rate (£12,571–£50,270)
8.75%
10.75%
+2%
Higher rate (£50,271–£125,140)
33.75%
35.75%
+2%
Additional rate (£125,140+)
39.35%
39.35%
Unchanged
Dividend allowance
£500
£500
Unchanged
How Much More Will You Pay?
Dividend Income (above £500 allowance)
Extra Tax — Basic Rate
Extra Tax — Higher Rate
£5,000
£100/year
£100/year
£10,000
£200/year
£200/year
£25,000
£500/year
£500/year
£50,000
£1,000/year
£1,000/year
Company directors: If you pay yourself via a salary+dividend combination, this change directly affects your take-home pay. Review your salary/dividend split with your accountant before the end of April.
Who Is Affected?
Shareholders holding UK or international stocks outside an ISA
Limited company directors drawing dividend income
Investors in equity funds or investment trusts
Buy-to-let landlords who also receive dividend income
What Can You Do About It?
Bottom line: The 2% rise sounds small but adds up fast on larger portfolios. The ISA is now more valuable than ever — use the full £20,000 allowance before 5 April 2027 to shelter as much dividend income as possible.
By Chandraketu Tripathi · Updated April 2026 · kaeltripton.com
Live Tool
Checking when a stock exchange is open? Use our free Global Stock Market Hours tool — live open/closed status, countdown timers, and public holiday alerts for 47 exchanges worldwide. No signup required.
The content on Kaeltripton.com is for informational and educational purposes only and does not constitute financial, investment, tax, legal or regulatory advice. Kaeltripton.com is not authorised or regulated by the Financial Conduct Authority (FCA) and is not a financial adviser, mortgage broker, insurance intermediary or investment firm. Nothing on this site should be construed as a personal recommendation. Rates, figures and product details are indicative only, subject to change without notice, and should always be verified directly with the relevant provider, HMRC, the FCA register, the Bank of England, Ofgem or other appropriate authority before any financial decision is made. Past performance is not a reliable indicator of future results. If you require regulated financial advice, please consult a qualified adviser authorised by the FCA.
CT
Chandraketu Tripathi
Finance Editor · Kaeltripton.com
Chandraketu (CK) Tripathi, founder and lead editor of Kael Tripton. 22 years in finance and marketing across 23 markets. Writes on UK personal finance, tax, mortgages, insurance, energy, and investing. Sources: HMRC, FCA, Ofgem, BoE, ONS.
