Dividend Tax UK: Complete 2026/27 Guide

The dividend allowance for 2026/27 is just £500, down from £2,000 a few years ago.

Above the allowance, dividends are taxed at 8.75% (basic), 33.75% (higher), and 39.35% (additional rate).

Dividends inside an ISA, SIPP, or JISA are fully tax-free and never touch your allowance.

Sheltering shares, splitting holdings with a spouse, and Bed-and-ISA are the three biggest legal levers.

Limited company directors should reassess the old low-salary-high-dividend playbook; the maths has shifted.