Short answer
After the £500 dividend allowance, dividends are taxed at 10.75% within the basic rate band, 35.75% in the higher rate band and 39.35% above the additional rate threshold. Dividends are treated as the top slice of your income.
Directors, salary & dividends
What are the dividend tax rates this year?
Dividend tax is 10.75% at basic rate, 35.75% at higher rate and 39.35% at additional rate, after a £500 allowance.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityWhat this means for your company
After the £500 dividend allowance, dividends are taxed at 10.75% within the basic rate band, 35.75% in the higher rate band and 39.35% above the additional rate threshold. Dividends are treated as the top slice of your income.
01
Where your dividends fall
02
Paying the tax
Where your dividends fall
Salary, pension and rental income are taxed first, then dividends sit on top. A director with £12,570 of salary and £40,000 of dividends uses the basic rate band for most of those dividends at 10.75%, with the remainder taxed at 35.75% once total income passes the basic rate limit.
Pension contributions and gift aid extend the basic rate band, which can move dividends out of the 35.75% band. That is one of the few genuinely reliable planning levers available in-year.
Paying the tax
Dividend tax is collected through Self Assessment, due by 31 January after the tax year, with payments on account for 31 January and 31 July once the liability passes £1,000 and is not mostly collected at source.
The first year is the cash trap: the January bill can include the balancing payment plus a payment on account, effectively eighteen months of tax at once. Reserve for it as dividends are drawn.
Before you act
Rates, thresholds and deadlines quoted here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.
Local help
Talk to a limited company accountant near you
We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
What are the dividend tax rates this year?: questions directors ask
Can dividend tax be collected through PAYE?
Sometimes, through a coding adjustment, if the amount is modest and you file early enough.
Are dividends from ISAs taxable?
No. Dividends inside an ISA or pension are outside the dividend tax rules entirely.
Is there a calculator?
Yes, our dividend tax calculator covers both 2025/26 and 2026/27 rates.
What records are needed for what are the dividend tax rates this year?
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
How much does help with what are the dividend tax rates this year cost?
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Can you take over what are the dividend tax rates this year from another accountant?
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Can what are the dividend tax rates this year be handled online?
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
Which accounting software works best for what are the dividend tax rates this year?
We regularly work with Xero, QuickBooks, FreeAgent, Sage and connected sales or expense apps. The right setup depends on transaction volume, integrations and the reports you need, not simply the software brand.
What tax deadlines matter for what are the dividend tax rates this year?
The relevant calendar may include annual accounts, Corporation Tax payment and return dates, confirmation statements, VAT returns, payroll submissions and Self Assessment. We map the dates from your company year end and registrations.
Is this what are the dividend tax rates this year guidance personal tax advice?
No. This page explains general UK rules and common accounting treatment. Your facts, contracts and wider tax position must be reviewed before you rely on a conclusion.
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Check the current rules
Use official information as your reference point.
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.