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A tax-free allowance for dividend income each tax year.
The Dividend Allowance is the amount of dividend income you can receive each year without paying dividend tax. For 2026/27, the allowance is £500. Dividends above this amount are taxed at 10.75% (basic rate), 35.75% (higher rate), or 39.35% (additional rate), subject to your total taxable income and tax band. The allowance applies per person, not per company.
This definition is for informational purposes only and does not constitute tax, legal, or financial advice. Rules may change and outcomes depend on your circumstances.
These GOV.UK and HMRC sources provide the official context for this glossary entry. The definition is educational and does not determine your individual tax position.