Dividend tax rates 2026/27

How the band is found

Dividends are added to other income, such as a salary or a pension, to find which band they fall into. Two people with the same dividends can therefore pay different rates on them, because the one with the larger salary reaches the higher band sooner. When the total crosses a band boundary, part of the dividends is taxed at one rate and the rest at the next.

Any personal allowance that other income leaves unused covers dividends first, and those dividends are free of tax. The dividend allowance then covers a further slice. Tax is charged only on dividends above both. The dividend tax calculator takes a salary and a dividend total and shows which band each part of the dividends falls in.

Scotland and ISAs

Scottish taxpayers pay the same dividend rates as the rest of the UK. Their Scottish bands apply to wages, pensions and most other income, and the income tax rates page sets out both systems. Dividends from shares held inside an ISA are free of tax.

Company owners and reporting

People who own a limited company often take part of their income as dividends. The company itself pays corporation tax on its profits, and the corporation tax calculator works out that bill for a given profit.

Dividends above both the unused personal allowance and the dividend allowance must be reported to HMRC. GOV.UK's guide to tax on dividends explains the ways to do this.