Dividends above the allowance are taxed at special rates that depend on your Income Tax band. From 6 April 2026 the basic and higher dividend rates rose by 2 percentage points.
2026/27 dividend rates
| Band | Rate on dividends above the £500 allowance |
|---|---|
| Basic rate | 10.75% |
| Higher rate | 35.75% |
| Additional rate | 39.35% |
Gov.uk worked example
£29,570 wages + £3,000 dividends:
- Personal Allowance uses £12,570 of the wages
- £17,000 of wages taxed at 20%
- £500 of dividends covered by the dividend allowance
- £2,500 of dividends at 10.75% = £268.75
Scottish taxpayers still pay these UK dividend rates; only non-dividend income uses Scottish Income Tax bands.
Frequently asked questions
What is the dividend allowance for 2026/27?
£500. You pay no dividend tax on the first £500 of dividends (after any unused Personal Allowance).
What are the 2026/27 dividend tax rates?
10.75% within the basic rate band, 35.75% within the higher rate band, and 39.35% at the additional rate. These apply UK-wide, including Scotland.
Disclaimer: Results are estimates for guidance only. They are not financial, tax or legal advice. Rules vary with your circumstances — check official guidance or speak to a qualified adviser before making decisions.
Sources
- Income Tax rates and Personal Allowance (checked 5 October 2026)
- Scottish Income Tax rates (checked 5 October 2026)
- Rates and thresholds for employers 2026 to 2027 (checked 5 October 2026)
- National Insurance: how much you pay (checked 5 October 2026)
- National Insurance rates and categories (checked 5 October 2026)
- 2026 to 2027: Student and Postgraduate Loan deduction tables (checked 5 October 2026)
- Tax on dividends (checked 5 October 2026)
- Corporation Tax rates and allowances (checked 5 October 2026)
- Income Tax — changes to tax rates for property, savings and dividend income (checked 5 October 2026)