How dividend tax works in United Kingdom
Dividend tax applies after your personal allowance and the separate dividend allowance. Dividends from ISA holdings stay tax-free, but dividends from ordinary company shares can still be taxable once you are above the allowance.
For 6 April 2026 to 5 April 2027, dividend tax rates are 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers and 39.35% for additional-rate taxpayers.
Ordinary UK company dividends are usually paid without withholding tax. Scotland and Wales use the same dividend tax rates as the rest of the UK.
Tax rates at a glance
- Dividend allowance
- GBP 500
- Basic rate dividend tax
- 10.75%
- Higher rate dividend tax
- 35.75%
- Additional rate dividend tax
- 39.35%
- Withholding tax on ordinary dividends
- 0%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
ShareholdersFoundersUK company ownersInvestorsFamily companies
Watch out for
- The dividend allowance is only GBP 500, so even modest portfolios can produce a tax bill once the allowance is used up.
- Dividends sit on top of your other income when HMRC decides which band you are in.
- REIT and PAIF distributions can have separate withholding rules, so not every payment that looks like a dividend is taxed the same way.
Frequently asked questions
What is the UK dividend tax rate?
For 2026/27, the UK dividend tax rates are 10.75%, 35.75% and 39.35%, depending on your income tax band.
Is there a dividend allowance?
Yes. The dividend allowance is GBP 500 for 2026/27.
Do UK companies withhold dividend tax?
Ordinary UK company dividends usually do not have withholding tax. The shareholder may still owe personal dividend tax later.