What is the dividend allowance?

£500 for the 2026 to 2027 tax year. The 2027/28 figure has not been announced yet.

Can dividends push me into the higher rate?

Yes. Dividends are added on top of your other income, so the part that goes above the basic-rate band is taxed at the higher dividend rate.

Does the £500 allowance use up my tax band?

Yes. The allowance is a 0% rate, not a deduction, so the £500 still counts towards the basic or higher-rate band.

UK Dividend Tax 2027/28 Calculator

Q: What are the dividend tax rates?

For 2026/27: 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band.

UK dividend tax on the latest published rates (2026/27): a £500 dividend allowance, then 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band. Dividends are stacked on top of your other income to decide which band they fall in. 2027/28 rates are not yet announced, so this page uses the 2026/27 figures.

Other taxable income (salary etc £)

Dividend income (£)

Dividend Rates and Allowance

For the 2026 to 2027 tax year the dividend allowance is £500 and the rates above it are 10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate). Dividends that fall inside your Personal Allowance are not taxed and do not use the dividend allowance.

How the Bands Are Applied

Your other income uses the Personal Allowance (£12,570, reduced by £1 for every £2 of total income over £100,000) and the tax bands first. Dividends go on top: the first £37,700 of taxable income is the basic-rate band, taxable income up to £125,140 is the higher-rate band, and anything above is the additional-rate band. The £500 allowance covers the first £500 of taxable dividends at 0%, but that £500 still counts towards the band.

Worked Example

Wages of £29,570 and dividends of £3,000 give total income of £32,570. After the £12,570 Personal Allowance, £17,000 of wages is taxed at 20%, £500 of dividends is covered by the allowance and the remaining £2,500 is taxed at 10.75% = £268.75. This is the example HMRC publishes.

What This Calculator Leaves Out

Dividends held in an ISA are not taxed and should not be entered. Scottish income tax bands apply to earnings only; dividends use the UK bands shown here. The calculator does not handle savings interest, Marriage Allowance or Gift Aid.

Source and Disclaimer

Figures are the 2026/27 rates published by HMRC. 2027/28 rates had not been announced when this page was last updated.

Source: GOV.UK — Tax on dividends and Income Tax rates and allowances. Last updated: October 2026.