Dividend tax in 2026/27: the £500 allowance, the rates and how to report
Published · 3 min read · Figures checked . UK rules and rates change, so check the official sources below before you act.
Dividends from shares can be taxable outside an ISA or pension. This guide explains the £500 dividend allowance, the 2026/27 rates of 10.75%, 35.75% and 39.35%, and when dividends have to be reported to HMRC.
What dividends are and when they are taxed
A dividend is a share of a company's profit paid to its shareholders. Many people receive them from shares or from funds that hold shares. Dividends are treated as income, but they are taxed at their own rates, which are different from the rates on wages.
Three things can mean no tax is due on dividends. Dividends from shares held in an ISA are not taxed. Dividends that fall within your Personal Allowance are not taxed. And the first £500 of dividends each year is covered by the dividend allowance.
How the rates work
Which rate applies depends on your Income Tax band. That band is worked out from your total income, meaning your dividends added to your other income such as wages or pensions. If your dividends cross from one band into the next, you can pay more than one rate.
The rates for 2026/27 are higher than in 2025/26, when the basic and higher dividend rates were 8.75% and 33.75%. The additional rate stayed at 39.35%. The £500 allowance did not change.
A worked example from GOV.UK
GOV.UK gives an example for 2026/27 of someone with £29,570 in wages and £3,000 in dividends. Their total income is £32,570. After the £12,570 Personal Allowance, their taxable income is £20,000, which is in the basic rate band.
- 20% tax is paid on £17,000 of wages.
- No tax is paid on £500 of dividends because of the dividend allowance.
- 10.75% tax is paid on the remaining £2,500 of dividends.
The dividend allowance is not extra income that sits outside the bands. Dividends covered by it still count towards your total income when working out which band you are in.
England, Wales, Northern Ireland and Scotland
The dividend rates are the same across the whole UK. Scottish Income Tax rates apply to wages, pensions and most other income, but GOV.UK states that Scottish taxpayers pay the same tax as the rest of the UK on dividends and savings interest.
When dividends need to be reported
The steps depend on how much dividend income you received above your allowances.
- If your dividends are within your dividend allowance, you do not need to tell HMRC.
- Up to £10,000 of dividend income: if you already file a Self Assessment return, include it there. If you do not, you can tell HMRC after 5 April and before 5 October, and ask for your tax code to be updated so the tax is collected from wages or a pension, or contact the HMRC helpline.
- Over £10,000 of dividend income: a Self Assessment tax return is needed. If you do not normally file one, HMRC should be told by 5 October after the end of the tax year in which the income was received.
The sources below give the full detail on each step.
Check before you act
Rates, allowances and reporting rules can change, and your own situation may differ from the examples here. It is worth confirming the figures on the official GOV.UK pages linked below. If you are unsure whether you need to report dividends, HMRC can explain what applies to you.
Sources
For information only. See our disclaimer and editorial standards. Spotted an error? Tell us.
