2026/27
Dividend tax
| Band | Rate | Notes |
|---|---|---|
| Up to £37,700 | 10.75% | Basic |
| £37,701 – £125,140 | 35.75% | Higher |
| Over £125,140 | 39.35% | Additional |
- Dividend allowance£500
2025/26
Dividend tax
| Band | Rate |
|---|---|
| Over £0 | 8.75% |
| Over £0 | 33.75% |
| Over £0 | 39.35% |
- Dividend allowance£500
Dividend tax explained
Dividends from shares are taxed differently from salary. You have a tax-free dividend allowance, and dividends above it are taxed at the ordinary, upper and additional dividend rates depending on your income band. The tables above show the current allowance and rates.
For company directors, the balance between salary and dividends is a key planning point. Our personal tax and compliance services optimise it for you.
Frequently asked
How much dividend is tax-free?+
Up to the dividend allowance each year; dividends above it are taxed at the dividend rates for your income band. See the current figures above.
Is it better to take salary or dividends?+
For owner-directors a mix is usually most efficient, but it depends on profits, other income and NI. We calculate the optimal split.