Tax · UK · 🇬🇧 United Kingdom

Dividend Tax on Shares in the UK 2026/27

The dividend allowance, current rates, and how foreign dividends are treated.

Updated August 2026 · 6 min read

Anyone holding dividend-paying shares outside a tax-efficient wrapper needs to know how UK dividend tax works — and the rates changed as of 6 April 2026.

The dividend allowance

Every taxpayer has a £500 tax-free dividend allowance for 2026/27. This is the amount of dividend income you can receive in the tax year without paying any dividend tax, regardless of your other income — though it still uses up part of your income tax band.

Current dividend tax rates

For 2026/27, dividend income above the allowance is taxed at 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers, and 39.35% for additional-rate taxpayers. The basic and higher rates rose by 2 percentage points from 6 April 2026 (previously 8.75% and 33.75%), following the Autumn 2025 Budget.

How dividends stack with other income

Dividends are taxed after your other income: salary, pension and rental income are counted first, then savings income, then dividends on top. Which band a dividend falls into depends on everything below it, not simply on the size of the dividend itself.

Dividends within an ISA

Dividend income from shares held within a Stocks and Shares ISA is entirely free of dividend tax, with no need to report it — the same shelter that applies to Capital Gains Tax.

Foreign dividends

Dividends from non-UK companies (such as Italian, German or French shares) follow the same UK tax principles but can involve additional complications, including tax already withheld abroad and exchange rate conversions — relief for foreign withholding tax is usually available under the relevant double taxation treaty.

Reporting

You must complete a Self Assessment return if your total dividend income exceeds £10,000 in the tax year, or if you owe tax on dividends above the £500 allowance and don't already have it collected another way.

This guide is for information purposes only and does not constitute individual tax or investment advice. Tax rules can change and everyone's situation is different: for an assessment of your specific circumstances, consult a qualified accountant or tax adviser, or check current guidance at GOV.UK. Taxation of foreign dividends additionally depends on the specific treaty between the UK and the dividend-paying company's home country, so the information here is general and does not replace a case-by-case check.