Understanding dividend tax is important for anyone who receives income from shares in a company. Dividends are taxed differently from salary, pensions and other forms of income, with their own allowances and tax rates. For the 2026-27 tax year, individuals do not pay tax on dividend income that falls within their Personal Allowance of £12,570. In addition, there is a separate dividend allowance of £500. Dividend income received above these allowances is generally subject to t