UK dividend tax and allowance: 2026/27 rates explained

Dividend tax in the UK applies to income from shares above a tax-free allowance. ONLYWAY NEWS breaks down the dividend allowance, the rates for the 2026/27 tax year and how to report, relying only on official GOV.UK pages.

What is the dividend allowance and how big is it?

The dividend allowance is the amount of dividends you can receive tax-free. According to GOV.UK, the allowance is £500 a year, and tax is charged only on dividend income above it. In addition, dividends within your Personal Allowance are not taxed.

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What are the dividend tax rates for 2026/27?

The rates for the period from 6 April 2026 to 5 April 2027 on dividends above the allowance, according to GOV.UK, are:

• basic rate — 10.75%;
• higher rate — 35.75%;
• additional rate — 39.35%.

The official GOV.UK technical note states that the basic and higher rates are increases, while the additional rate of 39.35% is unchanged. The dividend allowance is kept at £500.

How do you work out your tax band?

To work out your tax band, add your total dividend income to your other income; you may pay tax at more than one rate. GOV.UK gives a 2026/27 example: with £3,000 of dividends and £29,570 of wages, the taxable income is £20,000. The tax is 20% on £17,000 of wages, no tax on £500 of dividends (within the allowance) and 10.75% on the remaining £2,500 of dividends.

Are dividends in an ISA taxed?

No. According to GOV.UK, you do not pay tax on dividends from shares held in an ISA. These dividends are therefore left out of the calculation and do not use up your dividend allowance.

When do you have to tell HMRC about dividends?

If your dividends are within the yearly allowance, you do not need to tell HMRC. For income up to £10,000 where you do not file a return, you must tell HMRC after the tax year ends on 5 April and before 5 October — either by asking HMRC to change your tax code so the tax is taken from your wages or pension, or by contacting the HMRC helpline. If you file Self Assessment, report the dividends on your return.

What if your dividends are over £10,000?

Then you must complete a Self Assessment tax return. If you do not normally file one, you must tell HMRC by 5 October after the end of the tax year in which you received the income, and register for Self Assessment. ONLYWAY NEWS advises checking the exact amounts and deadlines on GOV.UK, as the dividend rates rose from 6 April 2026.