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What is Dividend tax?
Last verified 31 October 2026
Dividend tax is the Income Tax you pay on dividends, which are payments a company makes to its shareholders out of profit. For 2026 to 2027 the dividend allowance is £500 and the rates above it are 10.75%, 35.75% and 39.35%.
Why it matters to landlords
It matters to landlords who hold property in a limited company, because getting money out as a dividend is a second layer of tax after Corporation Tax. Dividends inside your Personal Allowance are not taxed, and neither are dividends from shares held in an ISA.
Which of the three rates applies depends on the dividend falling in your basic rate, higher rate or additional rate band once your other income is counted. Rental profit you receive personally is not a dividend, so it is taxed at the ordinary property income rates instead.
Example
Aisha owns a property company and takes £20,000 in dividends. Her £12,570 salary uses up her Personal Allowance, so the dividends sit in the basic rate band. After the £500 allowance she pays 10.75% on £19,500, which is £2,096.25.
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