Author: yd4jx

Since the dawn of the Bill Clinton era over 30 years ago, no journalist has more incisively illuminated the confines of U.S. liberal centrism than Daniel Lazare. In books like The Frozen Republic and The Velvet Coup as well as countless articles in Jacobin, New Left Review and other outlets, Dan has plumbed America’s deep-seated Constitutional paralysis and exposed the futility of combating carbon pollution without pricing fossil fuels’ climate damage into their market price. 

The best-selling book Abundance was perfectly tailored for Dan’s scalpel, and his review last month for the Union of Radical Political Economists (URPE) does not disappoint. Rather than a polemic, Dan’s review gives Abundance its due — “In their effort to reduce environmental harms, greens have wound up hobbling production in such a way as to … undermine efforts to deal with the climate crisis in an effective and comprehensive way.” Yet as he points out, “The disease is intolerable, and so is the cure” of making polluters pay through carbon taxes.

Dan’s review from URPE is reproduced below in its entirety, with permission. The graphics are ours. Dan currently publishes at Substack.

Book Review: Ezra Klein & Derek Thompson, Abundance.

Inside Ezra Klein and Derek Thompson’s rather pallid bestseller is a vigorous Marxist polemic trying to get out. Abundance begins with a quote from Aaron Bastani’s Fully Automated Luxury Communism (Verso, 2019) and ends with one from the Communist Manifesto: “The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together.” Together, they serve to bookend the authors’ argument that in their effort to reduce environmental harms, greens have wound up hobbling production in such a way as to exacerbate inequality and homelessness and undermine efforts to deal with the climate crisis in an effective and comprehensive way.

Despite protests from Robert Kuttner, co-founder of The American Prospect, and other outraged liberals, the argument carries weight. From a Marxist perspective, the reasons are clear. Liberal environmentalism is an ideology of just saying no, i.e. just say no to dangerous toxins in the water supply, to filling the atmosphere with noxious fumes, to scattering trash along highways and byways, and so forth. NIMBYism adds a further fillip that if you’re going to engage in such activities or do anything else that might disturb the environmental equilibrium, even if it’s for a good cause, don’t do it here. Since there is nothing that doesn’t disturb the environment in one way or another, the result is a stand-pat philosophy whose purpose is to preserve the status quo. Zeroing in on southern California, Klein and Thompson neatly sum up the prevailing ethos: “When do Angelenos want affordable housing? Now!  Where do they want it? Not here!” The problem is that anything resembling a positive program, a way of organizing production so that it doesn’t harm the environment and in fact may even improve it, is absent.

The answer to the climate crisis is the polluter-pays principle.

The reason for this is clear as well. The answer to the climate crisis, the environmental crisis, and all the rest is to require capitalist production to bear the full cost. If a gallon of gasoline generates x amount of pollution and carbon emissions, not to mention expenditures for highway maintenance, noise abatement, and emergency services, then the simplest and most elegant solution is to incorporate the cost of x into the price of gas so that producers are forced to deal with the full consequences of their actions.

This is what’s known as PPP – the polluter-pays principle. But it’s impractical, which is to say incompatible with capitalist production, because it would wipe out profits. What would happen to the US auto industry if society were to recognize that the true cost of gasoline is not $4 or $5 a gallon, but $15, $20, or more? What would the results be for the “drill, baby, drill” crowd in both Texas and the Middle East if structurally-induced fossil-fuel consumption were to cease? Tolerance of environmental harms is a form of subsidy since it requires the state to cover costs that producers generate. Society pays them, in effect, to pollute. The long-term consequences are proving fatal as the climate crisis accelerates. Yet the short-term consequences of de-subsidization would prove fatal to bourgeois liberalism.

So bourgeois society dithers and dawdles, as Abundance describes. “In 2022, ninety countries and territories experienced often violent protests over the rising price of fuel,” Klein and Thompson recount. Subsidies must therefore continue. They quote a political scientist named Erik Voeten who notes that “people who bear the cost of climate policies increasingly flock to the far right.” So nothing can be done in terms of climate mitigation for fear of furthering rightwing polarization. The authors quote a pair of legal academics named J.B. Ruhl and James Salzman who note that property owners do not cotton to the prospect of oil pipelines or electric transmission lines running through their backyard. But “[g]uess what,” Ruhl and Salzman add, “they do not like the idea of wind turbines or solar panels in their backyard either.” Since they don’t like the problem or the solution, nothing can be done. The disease is intolerable, and so is the cure.

Abundance is highly effective in depicting how this policy snarl plays out. “In much of San Francisco,” Klein and Thompson write, “you can’t walk twenty feet without seeing a multicolored sign declaring that Black Lives Matter, Kindness Is Everything, and No Human Being Is Illegal. Those signs sit in yards zoned for single families, in communities that organize against efforts to add the new homes that would bring those values closer to reality.” San Francisco’s black population has fallen steadily since 1970 due at least in part to restrictions that force poor people in general into longer and longer commutes, if not outright homelessness.

The middle class is hypocritical, something that “progressives” would know if they ever read Flaubert, Sinclair Lewis, John Dos Passos, or Ring Lardner (which they don’t). California “is dominated by Democrats, but many of the people Democrats claim to care about most can’t afford to live there,” Abundance declares. Last year, “voters [who] were most exposed to the day-to-day realities of liberal governance” demonstrated their displeasure by casting ballots for the Republicans. “Nearly every county in California moved toward Trump, with Los Angeles County shifting eleven points toward the GOP.”

Liberalism has sown the seeds of its own destruction. 

It’s a case of liberalism sowing the seeds of its own destruction. Abundance is particularly scathing on California’s great misadventure with high-speed rail. This is the project that Governor Jerry Brown initiated in 1982 with visions of bullet trains whizzing back and forth between San Francisco and Los Angeles. After all, if Japan can do it, why not the United States? Fourteen years later, the state formed a high-speed rail authority, and in 2008 voters authorized $33 billion. That was more than a quarter of a century of doing zilch, but Californians were assured that the first segment would go on line by the year 2020. In 2009, Barack Obama offered a full-throated endorsement:

“Imagine boarding a train in the center of a city. No racing to an airport and across a terminal, no delays, no sitting on the tarmac, no lost luggage, no taking off your shoes. Imagine whisking through towns at speeds over one hundred miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination. Imagine what a great project that would be to rebuild America.”

Except that do-nothing-ism continued until the project finally collapsed. “Let’s be real,” Gavin Newsom announced in 2019. “The project, as currently planned, would cost too much and take too long. There’s been little oversight and not enough transparency. Right now, there simply isn’t a path to get from Sacramento to San Diego, let alone from San Francisco to LA. I wish there were.”

An astonishing $33 billion had gone down the drain. But why? Klein and Thompson describe how the project immediately bogged down in innumerable negotiations over property rights. “Negotiating with courts, with funders, with business owners, with homeowners, with farm owners,” they write. “Those negotiations cost time, which costs money. Those negotiations lead to changes in the route or the build or the design, which costs money.” State officials relied on expensive consultants who made matters worse: “It was one of these consultants – WSP – that estimated the system would cost only $33 billion and take only twelve years to build. But WSP was joined by Project Finance Advisory, Cambridge Systematics, Arup, TYLin, HNTB, PGH Wong Engineering, Harris & Associates, Arcadis, STV, Sener, and Parsons Corporation.” The Los Angeles Times concluded that outsourcing “proved to be a foundational error in the project’s execution – a miscalculation that has resulted in the California High-Speed Rail Authority being overly reliant on a network of high-cost consultants who have consistently underestimated the difficulty of the task.”

California officials who had no idea how to proceed relied on high-priced consultants who didn’t know either. It’s an example of a liberal polity that knows how to say no and nothing else. It knows what it shouldn’t do, but not what it should.

Klein and Thompson deserve credit for bringing all this out. But Abundance suffers from numerous analytical shortcomings. The authors tiptoe around difficult political problems and take refuge in fatuous techno-optimism.  “[T]he only way for humanity to limit climate change while fighting poverty is to invent our way to clean energy that is plentiful and cheap and then spend enough to deploy it,” they assure their readers.  “…One of the most devilish challenges in energy is how to efficiently remove CO₂ from the atmosphere. By 2050, the world will need to permanently remove 10 billion tons of carbon dioxide from the skies every year to avoid the most catastrophic effects of climate change.” They open with a sci-fi vision in which future Americans drink desalinated sea water, consume lab-grown chicken and beef, get packages delivered by flying drones, and dash from New York to London in just over two hours in supersonic jetliners using low-carbon “green synthetic fuels.”

All of which is either puerile or misconceived. By itself, clean energy will do nothing to solve global warming unless counter-measures such as carbon taxes are instituted to inhibit fossil-fuel consumption. The answer to the climate crisis can’t be all carrot and no stick, but must include measures aimed at fostering conservation and energy efficiency. Carbon removal is a non-starter since it invariably requires more energy than it’s worth, while desalination is beside the point in a state like California in which there is so much waste that growers use 1,900 gallons of heavily-subsidized water to produce a pound of almonds despite a deepening drought. As for lab meat, it’s hard to imagine it being more energy efficient than raising chickens and rabbits the old-fashioned way on farms or in large-scale factories. It’s equally hard to imagine flying drones replacing delivery people on bikes in communities that are compact and car-free. Tech has its place, but real energy savings begin with such low-tech modes as walking and cycling.

As for supersonic air transport, fuhgeddaboudit. Air France and British Airways retired the Concorde in 2003 not only because one had crashed in Gonesse, France, killing 113 people, but because it was a gas-guzzler that used 3.8 times as much fuel as a modern wide-body airliner while carrying substantially fewer people. Green synthetic fuels will do nothing to eliminate that disparity.

Klein and Thompson are plainly on the side of more. But more of what, exactly? More CO₂-spewing SUV’s?

But there’s more. Not only is Abundance awash with meaningless techno-optimism, but it’s silent on the political issues that are the real barriers to progress. Take consumerism. Klein and Thompson are plainly on the side of more, as is any labor organizer fighting for higher wages. But more of what, exactly? More CO₂-spewing SUV’s? More highways so immobilized by traffic that they turn into elongated parking lots? More strip malls and gated communities? The problem with more in a period of capitalist decay is that it often translates into less, which is to say less mobility, less attractive surroundings, and less freedom to bike, walk, or engage in other modest pleasures due to dangerous levels of traffic. In describing rail advocates engaged in painstaking negotiations over rights of way, the authors don’t consider whether car, highway, and energy subsidies are fostering a highly diffuse form of sprawl that crowds out high-density modes. America can have high-speed rail and the concentrated urban development it feeds into. Or it can have ultra-low-density development and the rising levels of congestion and fossil-fuel consumption it generates. But it can’t have both. It’s a conundrum that Klein and Thompson resolutely avoid confronting, no doubt because it would make Abundance less user-friendly.

Then there’s the matter of class. Abundance is about middle-class consumers struggling to protect their way of life in ways that are increasingly counterproductive. But it makes no mention of the top one percent – really, the top 0.1 percent or even 0.01 – who are the real agents of destruction. Where are the oil barons who don’t care about the climate crisis as long as profits continue to grow? What about super-rich petro-sheiks – how did America wind up in alliance with such a motley crew? And what about the 40,000 US troops in and around the Persian Gulf? What are they doing there and whose interests are they serving? For anyone truly interested in American dysfunctionality, these are the places to start. Yet Klein and Thompson steer clear of such questions because they make people uncomfortable. And if there’s one thing we know about the publishing business, it’s that people don’t buy books that make them uncomfortable.

Finally, there is no sense of America as a society in an acute political crisis. Since Abundance was released in March, it evidently went to press before Trump was elected and therefore can’t be held responsible for failing to anticipate the full nature of the breakdown that is now before us. Still, it’s not as if there weren’t plenty of warnings as gridlock intensified and politics descended into game playing and threats. Government was in decay, yet no one could think of a way out.

Abundance reflects this growing pessimism, but never asks why. It quotes a University of Chicago economist named Chad Syverson on a construction-industry regulatory process that is complicated beyond reason. “There are a million veto points,” he complains. Yet there’s no sense that the problem involves not just economic regulation, but a legislative process that also contains a million veto points thanks to hundreds of congressional committees and subcommittees, outrageous filibuster rules, a “hold” system that allows individual senators to tie up legislation for months, and so forth. If Capitol Hill is in chaos, is it any surprise that the regulatory structure it gave rise to is in chaos too?

Yet Klein and Thompson avert their eyes. Serious political analysis is beyond their scope. They complain about political paralysis in Los Angeles, but make no mention of the political fragmentation that is the real source of the difficulty. After all, LA is not a city as most people think of the term. Rather it’s a baroque agglomeration that consists of a city, a county, plus 87 other municipalities, 80 school districts, 51 police departments, 29 fire departments, and 142 special districts covering everything from sanitation to mosquito control. It’s an assemblage with one overriding goal: political stasis. Nothing gets done because the political structure won’t let it. It’s a form of institutionalized fragmentation designed to scatter concerted political action to the four winds before it can take flight. Yet not only do Klein and Thompson fail to mention that the problem is effectively unfixable – they fail to mention the problem at all. Instead, they dwell on side issues even though the effect is to distort the picture as a whole.

There is a certain unity between political paralysis at the top and regulatory paralysis below, between gridlock on Capitol Hill and gridlock among thousands of local zoning boards and planning commissions. Both undermine democracy in any meaningful sense while giving corporate interests free rein. Together, they amount to an engraved invitation for a strong man to knock down barriers and overcome restraints. Today, that strong man is Donald Trump, and the way he’s going about it is dead certain to take a bad situation and make it many times worse. The result will be the opposite of abundance in every possible respect – in terms of democracy, equality, scientific advancement, and material progress. It’s a deepening descent that mindless techno-babble will do nothing to reverse.

In February, the IRS announced a new online reporting tool for suspected tax fraud, scams, and illegal activities. Smartly, the link is on the main page (in the dark blue line):

This month, the IRS released the 2026 Dirty Dozen list of various scams to watch out for, such as fake charities seeking your money, phishing to get you to click on links that enable the scammer to get information from you, AI-enabled robocalls impersonating an IRS employee, misleading tax advice on social media, and more.

For a list of the dirty dozen since the IRS started this in 2001, please visit my table. You’ll see that a few have disappeared but most continue or have morphed into digital scams.

The IRS also created two nice posters (pubs) with a QR code to encourage people to report scams. I think that while the IRS or other law enforcement agencies might not find your scammer, with more information, they do find some and can alert the public to new scams and ways to avoid them.  These pubs are 6138 and 6139.

Something that has also changed is getting emails that clearly look suspect such as because they are poorly written with grammar and spelling errors. Well, scammers likely are using AI to write more grammatically correct, enticing looking emails and texts – we all need to be extra cautious.  When in doubt, don’t click but instead find another way to verify if the information is valid, such as logging into the online account they are talking about (using your usual link rather than the one in the email), such as your IRS online account (or one I get frequently is that my Amazon account has been suspended (!) when it has not).

What do you think?  What more can be done to help people from being the victim of identity theft or falling for a tax scam such as claiming a bogus tax credit or giving money to scammers pretending to be the IRS or a state tax agency?

Dividend tax rates 2026/27 have changed, and you may already be paying more as a result.

The dividend tax rates 2026/27 rose on 6 April 2026, for the first time since 2022. The basic rate increased from 8.75% to 10.75%, and the higher rate rose from 33.75% to 35.75%.

The dividend tax rates 2026/27 directly affect your take-home income. Working out how much dividend tax you may pay in 2026 matters.

Your liability under the new dividend tax rates 2026/27 is only one part of the picture, though. New HMRC reporting requirements also apply, and they catch many directors off guard.

This article covers the dividend tax rates 2026/27 and what they mean in cash terms. It explains how to report dividend income to HMRC and what directors must now disclose on their return.

These requirements apply even when no dividend tax is due. Understanding the new rates and what they mean for your tax position is important.

So too is knowing the new reporting rules, the new director disclosure obligations, and staying fully compliant.

Dividend Tax Rates 2026/27: What Has Changed

The new rates came into force on 6 April 2026, as confirmed at the Autumn Budget 2025.

• The dividend tax basic rate rose by 2 percentage points to 10.75%.
• The higher rate rose by the same amount to 35.75%.

Both changes apply to income in the respective bands: £12,571–£50,270 for basic rate, and £50,271–£125,140 for higher rate.

• The additional rate, for income above £125,140, remains unchanged at 39.35%.
• The dividend allowance 2026/27 also stays at £500 — the first £500 of dividend income is taxed at 0%.

That £500 still counts towards your total income when HMRC determines your band. The April 2026 dividend tax increase therefore affects all taxpayers receiving dividends above that threshold.

For Scottish taxpayers: dividend tax in Scotland 2026 follows the UK-wide rates. Scotland sets its own rates for employment income, but dividend tax rates are the same across the whole country.

GOV.UK has published the full legislative detail in the income tax changes document published in November 2025. The impact of the changes falls entirely on basic and higher rate taxpayers.

How Much More Could You Actually Pay?

The three examples below show the cash impact of the dividend tax rates 2026/27 in real terms.

All use the 2026/27 thresholds: personal allowance £12,570, basic rate band up to £50,270.

These figures are estimates and your own position may differ; individual tax circumstances vary significantly.

Example A — Basic rate director

Salary £12,570 and dividends £37,430 give total income of £50,000. The salary uses the personal allowance in full, so all dividends fall in the basic rate band.

After the £500 allowance, £36,930 is taxable. At 8.75% in 2025/26, the bill was approximately £3,231. At 10.75% in 2026/27, it rises to approximately £3,970 — around £739 more per year.

Example B — Higher rate director

Salary £12,570 and dividends £75,000 give total income of £87,570. After the personal allowance, £37,700 of dividends falls in the basic rate band and £37,300 in the higher rate band.

Estimated tax in 2025/26 was around £15,803. Under the dividend tax rates 2026/27, that rises to approximately £17,329 — around £1,526 more per year.

Example C — Investor with no other income

This example covers dividend tax if no other income applies. A shareholder with no salary and £20,000 in dividends sees the personal allowance cover the first £12,570.

The remaining £7,430 falls in the basic rate band. After the £500 allowance, £6,930 is taxable: £606 in 2025/26 and £745 in 2026/27 — around £139 more per year.

Who Needs to Report Dividend Income to HMRC

Under the dividend tax rates 2026/27, reporting dividend income to HMRC depends on the amount received. It also depends on whether you already file a Self Assessment return.

Three routes apply, and using the wrong one can result in penalties.

Within the allowance — no action usually required

If total dividend income is £500 or less, no reporting action is needed. That said, close company directors face a separate disclosure requirement regardless of the amount — covered in the next section.

Up to £10,000 — notify HMRC or adjust your tax code

This route covers dividend tax if not in Self Assessment already. If dividend income exceeds £500 but is no more than £10,000, notify HMRC directly.

If you are employed or receive a pension, HMRC may adjust your tax code to collect tax through your pay. Use the Income Tax helpline or your Personal Tax Account online.

The key date is 5 October following the end of the tax year. For 2025/26 dividend income, that deadline is 5 October 2026.

Over £10,000 — Self Assessment required

Do I need to do Self Assessment for dividends above £10,000? Yes — it is mandatory, even if you would not otherwise file a return.

Not yet registered for Self Assessment? Apply to HMRC by 5 October 2026 for the 2025/26 tax year.

Most limited company directors already file a Self Assessment return. Taking dividends from your own company is a standard HMRC filing trigger. The question is usually about completing the new close company fields correctly.

What Directors Must Now Include on Their Self Assessment Return

From 6 April 2025, new reporting requirements apply to directors of close companies. The new close company dividend reporting rules for 2025/26 come from the Income Tax (Additional Information in Returns) Regulations 2025.

These rules introduced mandatory fields on the Self Assessment return for 2025/26 and all future years. A close company is broadly a UK limited company controlled by five or fewer participators.

It also covers a company controlled by any number of participator-directors. In practice, this covers most owner-managed businesses in the UK, and around 900,000 directors are thought to be affected.

Previously, a director declared total dividends as a single figure. There was no requirement to separate income from your own company from external shareholdings.

From 2025/26, those two sources must be reported separately. Under the dividend tax rates 2026/27 regime, close company directors must include the following on their return:

• The name of the close company and its Companies House registration number.
• The dividend income received from that company during the year — even if the figure is zero.
• The highest percentage of share capital held at any point during the tax year.
• A mandatory confirmation of director status — previously this question was optional on the return.

This is the point many close company directors miss when reviewing their obligations. The disclosure applies even when dividend income is zero or within the £500 allowance.

The allowance may exempt you from paying tax, but it does not exempt you from this new disclosure.

Under the Finance Act 2024, HMRC may charge £60 per missing item from the 2025/26 returns onwards.

Why Frozen Thresholds Make the Dividend Tax Rates 2026/27 Worse

The dividend tax rates 2026/27 do not operate in isolation. Frozen thresholds and dividends fiscal drag are compounding the impact.

Income tax thresholds are frozen until April 2031. These cover the personal allowance, the basic rate limit, and the higher rate threshold. The Autumn Budget 2025 confirmed this, extending a freeze in place since April 2022.

As salaries and profits rise with inflation, more income crosses into higher bands. That happens even when there has been no real-terms earnings increase — the defining feature of fiscal drag.

A director comfortably within the basic rate band a few years ago may now find some dividends taxed at 35.75%. The thresholds have not moved; the income has.

It remains at £12,570, costing a basic rate taxpayer roughly £581 per year in additional tax. The dividend rate increase comes on top of that.

A director near the £50,270 boundary may now find modest dividends straddling two bands.

Taken together, fiscal drag and the dividend tax rates 2026/27 rise can exceed 2 real-terms percentage points for some directors.

Four Ways to Reduce Your Dividend Tax Legally in 2026

Several legitimate strategies are available to reduce the impact of the dividend tax rates 2026/27 legally. Each depends on your individual position and merits careful thought before acting.

Use your ISA allowance

Dividends inside a Stocks and Shares ISA are free from dividend tax, regardless of the new rates. The annual ISA allowance is £20,000 per person. Moving shares into an ISA wrapper could meaningfully reduce your exposure over time.

Make pension contributions

Pension contributions made by a company director reduce your adjusted net income. A pension contribution can pull dividends from the higher rate band into the basic rate band.

This is worth considering if your income sits near £50,270.

The saving on that shift is 25 percentage points — from 35.75% down to 10.75%. A financial adviser can help you model the right contribution level for your circumstances.

Allocate shares to a spouse or civil partner

This must reflect a genuine transfer of ownership with proper legal documentation. HMRC scrutinises arrangements designed primarily for tax advantage.

Time your dividend declarations

Dividends are taxed in the year they are declared, not when they are received. A dividend declared on 5 April 2026 falls in 2025/26 at the lower rates. One declared on 6 April 2026 falls in 2026/27 at the higher rates.

Where you have genuine flexibility, aligning planned declarations with a lower-income year may reduce the rate that applies.

Salary vs Dividends in 2026: Does the Structure Still Work?

Dividends are not subject to National Insurance contributions, whereas salary above the primary threshold attracts both employee and employer NI.

That fundamental structural advantage has not changed with the 2026/27 rate increases. The dividend tax rates 2026/27 have narrowed the margin, however.

A basic rate director now pays 10.75% on dividend income above the allowance under the dividend tax rates 2026/27.

That compares with 8.75% the previous year, and the gap between salary and dividend tax efficiency has narrowed.

The calculation now depends more heavily on your corporation tax position. A company paying 25% corporation tax faces a combined effective rate that deserves careful modelling.

Relying on dividends simply being ‘lower rate’ is no longer sufficient for accurate planning. For directors earning above the basic rate threshold, the salary-dividend split merits a fresh review each year.

The salary-dividend structure can still work well for most directors. The case for it simply needs to be made on current numbers, not on assumptions from several years ago.

What to Check Before Filing Your 2025/26 Return

Before you file your 2025/26 return, work through three areas. First, confirm which dividend tax rates 2026/27 apply to your income band.

Check whether any of the four dividend tax-reduction strategies above are worth acting on given the dividend tax rates 2026/27.

Second, if you are a close company director, gather your Companies House registration number and your highest shareholding percentage. Prepare a breakdown of dividends from your own company versus any other sources.

Third, confirm your reporting route for 2025/26 dividend income. Dividends above £10,000 require Self Assessment registration by 5 October 2026.

Amounts between £500 and £10,000 should be notified to HMRC or adjusted via tax code by that date.

Reviewing your income structure at the start of the tax year gives you more options than leaving it to January.

Summing up: dividend tax rates 2026/27 and what they mean for you

The increases that took effect on 6 April 2026 are the most significant changes to dividend taxation in several years.

Basic rate taxpayers now pay 10.75% and higher rate taxpayers pay 35.75% on income above the £500 allowance.

Frozen thresholds running to April 2031 compound the impact of the new dividend tax rates 2026/27. For some directors, the real-terms increase exceeds the headline 2 percentage points.

The new close company disclosure rules add a separate compliance obligation regardless of whether any dividend tax is due.

For more on UK tax rules and reliefs, visit the tax guides section at taxrebateservices.co.uk.

Key Takeaways: Dividend Tax Rates 2026/27

• From 6 April 2026, the basic rate of dividend tax is 10.75% and the higher rate is 35.75%. Both are 2 percentage points higher than in 2025/26.
• The £500 dividend allowance and the additional rate of 39.35% remain unchanged for 2026/27.
• Income tax thresholds are frozen until April 2031. Fiscal drag may push more of your income into higher bands without any change in real earnings.
• From 6 April 2025, close company directors must report their shareholding percentage, company number, and dividend amount on their return. This is required even when no dividend tax is owed.
• Dividends above £10,000 require a Self Assessment return. Amounts between £500 and £10,000 should be notified to HMRC or adjusted via tax code by 5 October 2026.
• Options to reduce dividend tax legally include ISA contributions, pension contributions, spousal share allocation, and careful timing of declarations.

Dividend Tax Rates for 2026/27 FAQs

What Are the Dividend Tax Rates for 2026/27?

From 6 April 2026, the basic rate of dividend tax is 10.75% and the higher rate is 35.75%. Both are 2 percentage points higher than in 2025/26. The additional rate, for income above £125,140, remains unchanged at 39.35%. The £500 dividend allowance also remains in place.

How Much Dividend Tax Will I Pay in 2026?

If your total income stays within the basic rate band — up to £50,270 — you pay 10.75% on dividend income above the £500 allowance. A director drawing a salary of £12,570 and dividends of £37,430 may pay approximately £3,970 in dividend tax in 2026/27. That is around £739 more than in 2025/26.

Do I Need to Register for Self Assessment Because of Dividends?

If your dividend income for the 2025/26 tax year exceeds £10,000, you must register for Self Assessment by 5 October 2026. For amounts between £500 and £10,000, notify HMRC or request a tax code adjustment before that date. If your dividends are within the £500 allowance and you are not a close company director, no action is typically required.

What Must Close Company Directors Now Report on Their Tax Return?

From 6 April 2025, directors of close companies must report additional information on their Self Assessment return: the company name and Companies House registration number, the amount of dividend income received from that company (even if zero), and the highest percentage shareholding held during the year. This disclosure is mandatory even when no dividend tax is owed. A £60 penalty applies for each missing item under the Finance Act 2024.

How Can I Legally Reduce My Dividend Tax Bill in 2026?

Four approaches may help. Dividends received inside a Stocks and Shares ISA are completely tax-free, and the annual allowance is £20,000. Pension contributions reduce your adjusted net income and could pull dividends from the higher rate band into the basic rate band. Allocating shares to a lower-earning spouse or civil partner may reduce the rate applied to some dividends. Careful timing of dividend declarations — since dividends are taxed in the year declared — may also allow you to align payments with a lower-income year.