Dividend tax: the allowance, the rates and how to report it

How dividend tax works for 2026-27: the allowance, the rates, how your other income decides which rate applies and how to report it.

Tax year 2026-27 · Figures checked against GOV.UK on 6 November 2026

The dividend allowance and the rates

GOV.UK says you get a dividend allowance of £500 each year. Dividends above it are taxed at these rates for 2026-27:

10.75% for basic rate taxpayers
35.75% for higher rate taxpayers
39.35% for additional rate taxpayers

How your other income decides the rate

GOV.UK says to work out your tax band, you add your total dividend income to your other income, so you may pay tax at more than one rate. Dividends that fall within your Personal Allowance are not taxed.

Two worked examples

Both assume £2,500 of dividends in 2026-27 that fall entirely in one tax band, and the £500 allowance.

In the basic rate band: £2,500 − £500 = £2,000 is taxable, at 10.75%, which is £215.
In the higher rate band: £2,000 is taxable, at 35.75%, which is £715.

In practice your dividends may straddle two bands, in which case part of them is taxed at each rate.

When you need to tell HMRC

If your dividends are within the dividend allowance, GOV.UK says you do not need to tell HMRC.
If you have tax to pay and send a Self Assessment return, you report the dividends on it.
If you do not send a return and your dividends are up to £10,000, you must tell HMRC after 5 April and before 5 October following the tax year. You can ask HMRC to change your tax code so the tax is taken from your wages or pension.
If your dividends are over £10,000, you need to complete a Self Assessment return. If you do not usually file one, tell HMRC by 5 October after the end of the tax year, for example by registering for Self Assessment.

Check your own figures

The SavingTax app has a dividend tax calculator on Premium and a guide on dividend tax.

Sources

This page is general information, not financial, tax or legal advice. The examples are simplified. Your own position depends on your circumstances. For advice, speak to a qualified professional.