Dividend allowance

For 2026/27, the first £500 of dividend income is tax-free outside ISAs and pensions. Once you've received more than £500 in dividends in a tax year, you'll pay tax on anything above that amount at your income tax rate. Basic-rate taxpayers pay 10.75%, higher-rate taxpayers pay 35.75%, and additional-rate taxpayers pay 39.35%. Hold investments within an AJ Bell Stocks and shares ISA for example, and all dividends remain tax-free regardless of amount.

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