How dividend tax works
The rates and when it is paid - explained
Dividends you receive from your company are taxed through Self Assessment. You pay the tax when you file your annual return, not through PAYE during the year.
The rates for 2026/27
- First £500: 0% (dividend allowance)
- £501 to £50,270 total income: 10.75% on dividends
- £50,271 to £125,140 total income: 35.75% on dividends
- Above £125,140: 39.35% on dividends
When the tax is paid
Dividend tax for a tax year (6 April to 5 April) is due by 31 January following the year-end. For dividends taken in 2026/27, the tax is due by 31 January 2028. If your annual Self-Assessment liability exceeds £1,000, you will also make payments on account (advance payments) on 31 January and 31 July. We calculate and advise on these amounts with each Self Assessment return.
💡 Good to know: To stay in the basic rate dividend band (10.75%), keep your total annual income (salary plus dividends) below £50,270. Above this level, each pound of dividends costs 35.75p in tax. Planning dividends around this threshold can save thousands per year.
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