WageDividend Tax Rates 2026-27
Dividends are taxed at their own set of rates, separate from the rates on salary. After the £500 tax-free dividend allowance, dividends are charged at 10.75% in the basic band, 35.75% in the higher band and 39.35% in the additional band. For the 2026-27 tax year the basic and higher dividend rates have risen, so contractors and company directors taking dividends now pay more on the same amount than they did the year before. The table on this page shows each rate against the income band it applies to.
| Band | 2026-27 | 2025-26 |
|---|---|---|
| Basic | 10.75% | 8.75% |
| Higher | 35.75% | 33.75% |
| Additional | 39.35% | 39.35% |
What changed for 2026-27
The basic and higher dividend rates increased for 2026-27, moving to 10.75% and 35.75%. If your income and dividends are unchanged from last year, your dividend tax bill will be higher purely because of the rate change.
This matters most for people who take a large share of their income as dividends, such as contractors and company directors. A rise in the dividend rates raises the effective cost of drawing profit as dividends, which is one of the factors behind the salary-versus-dividend decision.
How the rates line up with the income bands
Each dividend rate maps to an income tax band. Dividends falling in the basic band are taxed at 10.75%, those in the higher band at 35.75%, and those in the additional band at 39.35%. Because dividends are stacked on top of your other income, your salary determines how much of each band is left for them.
The £500 allowance is charged before these rates apply. It shelters the first slice of dividends but still counts towards band usage, so it lowers the tax due without moving your remaining dividends into a lower band.
Frequently asked questions
Did dividend tax go up for 2026-27?
Yes. The basic and higher dividend rates rose for 2026-27 to 10.75% and 35.75%, so the same dividends are taxed more heavily than in the previous year.
What are the current dividend tax rates?
After the £500 allowance, dividends are taxed at 10.75% in the basic band, 35.75% in the higher band and 39.35% in the additional band.
General information, not advice. Estimates assume the standard 1257L tax code and typical circumstances; your payslip may differ by a pound or two because HMRC payroll software truncates at each step. Verify with HMRC or an accountant for any decision. WageReckon stores no salary data - the calculators run in your browser.
Sources
Rates for the 2026-27 tax year, current as of 24 July 2026. Source: HMRC (gov.uk). Contains public sector information licensed under the Open Government Licence v3.0. Source: HMRC / gov.uk. See how we calculate.