# What is the dividend allowance?

> Quick answer · Last updated 6 April 2026

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## In short

£500 a year. Above that, dividends are taxed at 8.75% (basic), 33.75% (higher) or 39.35% (additional).

The tax-free dividend allowance for 2026/27 is £500 per person. It was £2,000 as recently as 2022/23, before being reduced to £1,000 and then £500.

Dividend income above £500 is taxed on top of your other earnings: 8.75% in the basic-rate band, 33.75% in the higher-rate band and 39.35% in the additional-rate band.

Dividends paid into Stocks & Shares ISAs or pensions are not counted and are not taxed, so wrapping share investments first is usually the simplest way to avoid dividend tax.

## Related

- [Investing guide](https://moneyguide.org.uk/investing/)

## Primary source

gov.uk/tax-on-dividends

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.