UK dividend tax rate rise 2026/27: new rates, worked examples, and why savings and property tax aren't changing yet

From 6 April 2026, HMRC increased the two main dividend tax rates by 2 percentage points. That change is now live for the 2026/27 tax year. What trips people up is that the same Budget also announced 2-percentage-point rises to savings income tax and a brand-new set of property income tax rates — but those two don't start until April 2027. A lot of the coverage online blends all three changes together as if they land at once. They don't. This page separates what's actually changed for 2026/27 from what's only been announced for 2027/28, with worked examples for both.

What changed, and when

So for the current 2026/27 tax year, only dividend income is taxed any differently. Savings interest and rental profits are still taxed at the ordinary 20%/40%/45% rates, exactly as in 2025/26.

The dividend rates themselves

The £500 Dividend Allowance still works the same way: it's taxed at 0%, but it still uses up part of whichever rate band the dividend income would otherwise fall into — it doesn't sit on top of your other allowances.

Worked example 1: a retiree's dividend income

A retiree has £20,000 of pension income (non-savings income) and £30,000 of dividends, and no other income, for 2026/27.

1. Personal Allowance (£12,570) is set against the pension income first: £20,000 − £12,570 = £7,430 taxable at 20% = £1,486.
2. That leaves £37,700 − £7,430 = £30,270 of basic rate band still available for the dividends.
3. Of the £30,000 dividends, £500 is covered by the Dividend Allowance (0%). The remaining £29,500 fits entirely inside the £30,270 of basic rate band left over, so it's all taxed at the ordinary dividend rate.

At the 2025/26 rate: £29,500 × 8.75% = £2,581.25. At the 2026/27 rate: £29,500 × 10.75% = £3,171.25. The rate rise costs this retiree an extra £590 a year, even though their income hasn't changed at all.

Worked example 2: a company director with a larger dividend

A company director pays themselves a £12,570 salary (exactly the Personal Allowance, so no income tax on it) and takes £60,000 in dividends for 2026/27.

1. Because the salary uses up the Personal Allowance and no more, the full £37,700 basic rate band is still available for dividends.
2. £500 of the £60,000 dividends is covered by the Dividend Allowance. The remaining £59,500 splits across two bands: £37,700 at the ordinary rate, and the rest — £21,800 — at the upper rate.

At 2025/26 rates: (£37,700 × 8.75%) + (£21,800 × 33.75%) = £3,298.75 + £7,357.50 = £10,656.25. At 2026/27 rates: (£37,700 × 10.75%) + (£21,800 × 35.75%) = £4,052.75 + £7,793.50 = £11,846.25. The rate rise costs this director an extra £1,190 a year — more than double the retiree's increase, because a larger slice of their dividends sits in the upper rate band, which also rose by 2 points.

Why savings and property income look untouched this year

HMRC's own technical note confirms the 2026/27 figures for the starting rate for savings (0%, up to a £5,000 band), the Personal Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher rate taxpayers, £0 for additional rate taxpayers), and the ordinary income tax bands (20% to £37,700, 40% to £125,140, 45% above) are all identical to 2025/26. Rental profits are still taxed the same way too — as part of your normal non-savings income, at those same 20%/40%/45% rates. Nothing about how savings or property income is taxed changes until the 2027/28 tax year.

What's coming in 2027/28 (announced, not yet in force)

From April 2027, the government has also said it will change the order allowances and reliefs are allocated against income: reliefs usable against non-savings, non-property, non-dividend income (such as employment or pension income) get applied first, then any remainder goes against property income, then savings income, then dividends — in whichever order is most beneficial to the taxpayer. Income itself will be taxed in that same order: non-savings/non-property/non-dividend income, then property income, then savings income, then dividends last.

Quick answers

You can practice questions on this exact rate change, alongside the rest of UK Income Tax, on the UK Income Tax practice quiz.

This explainer covers the UK's 2025/26, 2026/27 and 2027/28 tax years for Income Tax on dividend, savings and property income. It's educational material only, not personal tax advice — check current HMRC guidance or a qualified adviser before acting on it, especially for the 2027/28 figures, which are announced but not yet in force.

Source: GOV.UK, "Changes to tax rates for property, savings and dividend income" (policy paper and technical note); GOV.UK, Budget 2025 Overview of Tax Legislation and Rates, Annex A: Rates and Allowances.

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