Budget Summary- Taxation of Dividends

The rate at which dividends falling in the basic or higher rate bands are taxed will rise by two percentage points from 6 April 2026.

Currently, dividends are taxed at the ordinary dividend rate of 8.75% where they fall within the basic rate band, at the upper dividend rate of 33.75% where they fall within the higher rate band and at the additional dividend rate of 39.5% where they fall in the additional rate band. All individuals, regardless of the rate at which they pay tax, are entitled to a dividend allowance of £500, which acts as a nil rate band rather than an allowance, using part of the tax band in which it falls.

From 6 April 2026, the ordinary dividend rate increases to 10.75% and the upper dividend rate increases to 35.75%. There is no change to the additional dividend rate which will remain at 39.35%.