Dividend tax in 2026/27: what changed from 2025/26

Most Income Tax main rates did not move in 2026/27. Dividend tax did. The official Income Tax rates and allowances page, updated on 6 April 2026, and Budget 2026 Annex A, updated on 5 November 2026, both set out the new ordinary and upper dividend rates. If you take dividends from a company, or you have investment dividends above the allowance, the change is worth a careful look when you compare a 2025/26 filing-year estimate with a 2026/27 planning estimate.

The official rates, side by side

The dividend allowance is £500 in 2025/26 and £500 in 2026/27. Annex A also lists £500 for 2027/28, so on the published table the allowance is not the thing that changed. You only pay tax on dividend income above the allowance. The rates on that slice are:

• 2025/26: ordinary (basic) 8.75%; upper (higher) 33.75%; additional 39.35%.
• 2026/27: ordinary 10.75%; upper 35.75%; additional 39.35%.

The additional rate is unchanged. The ordinary and upper rates each rise by two percentage points. Annex A uses the labels “dividend ordinary rate” and “dividend upper rate” for those first two bands, and “dividend additional rate” for 39.35%. The same Annex confirms that these figures apply to dividend income received above the £500 tax-free dividend allowance.

A compact example, labelled as an example and using official rates, shows the cash difference on a straightforward fact pattern. Suppose, after the Personal Allowance has already been used against other income, you have £10,000 of dividends, all still inside the basic-rate band. The first £500 is covered by the allowance. The remaining £9,500 is taxed at 8.75% in 2025/26, which is £831.25, and at 10.75% in 2026/27, which is £1,021.25. The extra tax on that slice is £190. If the same £9,500 sat entirely in the higher-rate band, the tax would be 33.75% (£3,206.25) in 2025/26 and 35.75% (£3,396.25) in 2026/27, an extra £190 again, because both of those rates also moved by two points. Additional-rate dividends at 39.35% are unaffected by the change.

How dividends sit on top of other income

Dividends are taxed as the top slice of income in the usual Self Assessment order: non-savings income first, then savings, then dividends. The dividend allowance is taxed at 0% but still uses up the rate band, so it can push later dividends into a higher dividend rate even though that first £500 is not itself charged. Scottish Income Tax rates do not apply to dividends; the UK dividend rates apply whether or not you are a Scottish taxpayer. Our tax calculator follows that order and will not put dividends through the Scottish starter-to-top scale.

Dividends also count towards the income used for the Personal Allowance taper above £100,000. A year that looks like “only dividends” can still reduce or remove the allowance if the official £1-for-£2 rule is met. They can also form part of the adjusted net income used for the High Income Child Benefit Charge, which has its own official threshold. Those interactions are easy to miss if you only compare the 8.75% and 10.75% headline rates.

What did not change, and what to do with the return

The main rates of Income Tax on employment, self-employment, pensions and, in these two years, property income, are not the dividend rates. Property income remains on the main rates in 2026/27; separate property rates start in 2027/28, which is a different Annex A change and is not a dividend change. Savings rates also stay at 20%, 40% and 45% in 2026/27.

When you file the 2025/26 return, due online by 31 January 2027, you should use the 2025/26 dividend rates, not the 2026/27 ones. The later rates belong to dividends of the year that started on 6 April 2026. Mixing the years is the most likely way to over- or under-estimate a bill. Switch the year on the calculator rather than editing a rate by hand. File the return itself online for free on GOV.UK; the official calculation on that return is the one HMRC will use. If a later official publication revises a rate, that publication wins over this guide.

Company owners, PAYE salaries, and records

Many people who notice this rate change are directors who pay themselves a salary within the Personal Allowance or basic-rate band and take the rest as a dividend. The official tax system still looks at the total of those slices, in order, with the dividend on top. A salary that uses up the Personal Allowance and most of the basic-rate band will leave less room for dividends at the ordinary rate, so more of the dividend may be charged at the upper rate — 35.75% in 2026/27 rather than 33.75% in 2025/26. Nothing in this guide is advice on how to split salary and dividends; it is only a description of the official rates that apply to each slice.

Investment dividends from shares you hold personally follow the same allowance and the same rates. A dividend received on 6 April 2026 or later is a 2026/27 dividend on the official tax-year boundary, even if the company prepared the voucher in March. Keep dividend vouchers and broker statements with the date of receipt, because that date, not the date you later spend the money, is what the tax year cares about.

If you already complete a return for self-employment or property, the dividend section of the same return is where these rates are applied. You do not send a separate “dividend return”. If dividends are your only reason for wondering whether you must file, use the official checker rather than assuming a £500 allowance means HMRC does not need a return. File, when you need to, on the free GOV.UK service, and use 2025/26 rates on the 2025/26 return even if you are reading this after April 2026.

Annex A also shows that the 2027/28 ordinary, upper and additional dividend rates stay at 10.75%, 35.75% and 39.35% on the published table, while property and savings rates are scheduled to change in that later year. Do not carry those 2027 property or savings figures back into a 2026/27 dividend estimate. Each official column is a different year.