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UK dividend tax rates rose again in April 2026. The basic rate climbed from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. Combined with the £500 dividend allowance (down from £2,000 in 2022/23), investors and company directors face significantly higher dividend tax bills. 2026/27 Tax Year Dividend Tax Rates 2026/27 — Confirmed
Source: Morningstar UK Tax Calendar 2026 (January 2026); Accace UK personal tax rates 2026/27; DNS Accountants tax rates 2026/27. These rates apply to dividend income above the £500 dividend allowance from 6 April 2026. Dividend Allowance — Historical Context
How Dividend Tax Is Calculated — ExampleExample: You earn a £40,000 salary and receive £5,000 in dividends from your investment portfolio outside an ISA. Your salary uses the basic rate band. The dividends are stacked on top: First £500 of dividends: 0% (dividend allowance). Next £4,500 of dividends: 10.75% = £483.75 tax. Total dividend tax: £483.75. If your salary were £55,000, the dividends would fall in the higher rate band: First £500: 0%. Next £4,500: 35.75% = £1,608.75 tax. Moving these dividends into an ISA would save £483.75 or £1,608.75 per year respectively. Dividend Tax for Company Directors
The rising dividend tax rates are narrowing the gap between salary and dividend income for company directors. At 10.75% basic rate dividend tax, the tax advantage of dividends over salary is shrinking. Directors with complex situations should review their salary/dividend split with an accountant. How to Reduce UK Dividend Tax
KAELTRIPTON VERDICT UK dividend tax rates rose again in April 2026. Basic rate taxpayers now pay 10.75% (up from 8.75%), and higher rate payers pay 35.75% (up from 33.75%). The £500 dividend allowance is unchanged. For investors and company directors, maximising ISA and SIPP usage is more important than ever — dividends inside these wrappers are completely tax-free. 2026/27 Rates — Confirmed Q: What is the dividend allowance 2026/27? A: £500 — the first £500 of dividend income is tax-free. Down from £2,000 in 2022/23. Q: What are the dividend tax rates 2026/27? A: 10.75% basic rate (up from 8.75%), 35.75% higher rate (up from 33.75%), 39.35% additional rate (unchanged). Source: GOV.UK April 2026. Q: Do ISA dividends get taxed? A: No — dividends inside an ISA or pension are completely exempt from UK dividend tax. Q: How are dividends taxed for company directors? A: 10.75% if basic rate; 35.75% if higher rate. First £500 is free. ISA and SIPP sheltering is essential. Related Articles This article is for informational purposes only and does not constitute financial or tax advice. Always consult a qualified accountant or tax adviser for your personal circumstances. All rates and figures verified from GOV.UK and official sources, April 2026. |
UK Dividend Tax 2026/27: Rates, Allowance & How to Pay Less
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