Our 2027/28 preview carries forward the £500 dividend allowance and dividend tax rates of 10.75%, 35.75% and 39.35%. No further dividend rate rise is assumed after the April 2026 increase; these are continuing-rule estimates, subject to further announcements.
Dividends sit above your salary, pension, rental profit and savings interest in the income tax calculation. The same £10,000 dividend can therefore produce a different bill for different people.
Last reviewed · 6 April 2027 – 5 April 2028
The ordinary dividend rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75% on 6 April 2026. The additional rate stayed at 39.35%. The 2027/28 preview continues those rules; it does not apply the new 22%, 42% and 47% savings and property rates to dividends.
Unused Personal Allowance can cover dividends before dividend tax is calculated. After that, the £500 dividend allowance taxes that slice at 0%, but it still counts towards your income tax bands and adjusted net income. Dividends inside an ISA are tax-free and do not use the dividend allowance.
Other income uses your bands before dividends. Some dividends may be taxed at 10.75% and the rest at 35.75%, even where your salary alone is below the higher-rate threshold. At higher total income, the Personal Allowance taper can also increase your overall bill. These examples isolate dividend tax and do not include any extra salary tax caused by tapering.
For borrowers within Self Assessment, if relevant unearned income exceeds £2,000, the whole amount is included in the student loan repayment calculation — not just the excess over £2,000. Dividends are one type of unearned income. The £500 dividend allowance does not create a separate student loan exemption; check your loan plan and combined income.
Dividend income tax rates apply across the UK, including Scotland. For a company director, dividend tax is separate from Corporation Tax on the company’s profit. Use the limited-company calculator for business profits, salary and extraction; use the dashboard for actual income from multiple sources.
Salary has already used the Personal Allowance; no savings, rental income or pension contributions.
| Calculation | 2027/28 preview |
|---|---|
| Gross dividends | £10,000.00 |
| Dividend allowance | £500.00 |
| Taxable dividends | £9,500.00 |
| Dividend income tax | £1,021.25 |
| Dividends after income tax | £8,978.75 |
Estimated dividend income tax: £1,021.25. Student loan repayments are separate.
Salary has already used the Personal Allowance; no savings, rental income or pension contributions.
| Calculation | 2027/28 preview |
|---|---|
| Gross dividends | £10,000.00 |
| Dividend allowance | £500.00 |
| Taxable dividends | £9,500.00 |
| Dividend income tax | £2,203.75 |
| Dividends after income tax | £7,796.25 |
Estimated dividend income tax: £2,203.75. Student loan repayments are separate.
Salary has already used the Personal Allowance; no savings, rental income or pension contributions.
| Calculation | 2027/28 preview |
|---|---|
| Gross dividends | £10,000.00 |
| Dividend allowance | £500.00 |
| Taxable dividends | £9,500.00 |
| Dividend income tax | £3,396.25 |
| Dividends after income tax | £6,603.75 |
Estimated dividend income tax: £3,396.25. Student loan repayments are separate.
Preview assumptions; England, Wales or Northern Ireland; full Personal Allowance; no other income, pension contributions or Gift Aid. Salary tax, Corporation Tax and student loan repayments are excluded.
The preview assumes no further dividend rate rise after April 2026. It uses 10.75%, 35.75% and 39.35%; the final position remains subject to further announcements.
The preview carries forward the current £500 dividend allowance. It is one allowance per person across all taxable dividends, not £500 for each shareholding.
They can. HMRC includes the whole relevant unearned-income amount where it exceeds £2,000 and a Self Assessment return applies. The result depends on your loan plan and wider income.
Estimates for planning, not personalised tax advice.