UK dividend tax basics

Start with the tax year and account

This guide covers UK dividend tax for 6 April 2026 to 5 April 2027 (2026/27), checked against HMRC guidance on 29 October 2026. Tax rules can change.

Dividends inside an ISA are not subject to UK dividend tax. This does not necessarily stop a foreign country withholding tax before the payment arrives. A tracker records investments; it does not open or manage an ISA.

What is the dividend allowance?

For 2026/27, the dividend allowance is £500. You also do not pay tax on dividends that fall within any unused Personal Allowance.

The dividend allowance is a zero-rate allowance, not a deduction that removes the income from your tax-band calculation. Dividends can still use up a band even when the allowance makes tax on that part zero.

Which rate applies in 2026/27?

Above the relevant allowances, the published dividend rates are 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band.

Add dividends to your other taxable income to work out which bands they fall into. You may pay more than one rate if your income crosses a boundary. Scottish income tax treatment and individual circumstances can make the overall calculation more complex.

Keep enough information to check your bill

Keep gross dividend amounts, tax withheld, dates, currencies and your broker statements. Do not assume the cash received is the full taxable dividend.

A calculator provides an estimate, not a filed tax return. Check HMRC reporting requirements and ask a qualified tax adviser if you are unsure, especially for overseas income.

• Separate ISA-held dividends from taxable holdings.
• Use the correct tax year, not just the calendar year.
• Include other taxable income when checking bands.
• Keep foreign withholding separate from UK tax.