Dividend and Savings Tax Increase for 2026/27: What You Need to Know

What Has Changed?

From the 2026/27 tax year, these rates have increased.

If your total income does not exceed £50,270, dividends will now be taxed at 10.75%. Dividend income within the higher rate band will be taxed at 35.75%, while the additional rate remains unchanged at 39.35%.

The dividend allowance remains at £500, meaning you can receive up to this amount tax-free. Any dividends above this threshold are taxed according to your income band.

Changes to Savings Tax

The same 2% increase also applies to savings income.

Savings tax rates will rise to 22% for basic rate taxpayers, 42% for higher rate taxpayers, and 47% for additional rate taxpayers.

The personal savings allowance remains in place. Basic rate taxpayers can still earn up to £1,000 in savings interest tax-free, while higher rate taxpayers receive a £500 allowance.

The savings starting rate of up to £5,000 continues to apply where non-savings income is below £17,570.

Is Taking Dividends Still Tax Efficient for Company Owners?

In many cases, yes. However, it may now require more careful tax planning before taking dividends, particularly in light of the 2026/27 UK tax changes.

What Should You Do Next?

With rising tax rates on both dividends and savings, it is increasingly important to review how you structure your income and consider your overall tax planning strategy.

Speak to an Expert About Your Tax Position

If you would like to understand how these dividend and savings tax changes affect your income or business, we are here to help you navigate the way.

Get in touch with our team for tailored dividend tax planning advice and support around the 2026/27 UK tax changes, so you can move forward with clarity and confidence.

FAQ’s

Will my dividend allowance change?

No, the £500 dividend allowance remains unchanged.

Are all dividend tax rates increasing?

Basic and higher rates have increased by 2%. The additional rate remains the same.

Does this affect savings interest as well?

Yes, savings tax rates have also increased by 2% across all bands.

Should I stop taking dividends?

Not necessarily. Dividends can still be tax-efficient, but may require more careful planning.