ACCA Applied Skills · Taxation (UK) · The scope of income tax
In 2026/27 which rate of income tax applies to dividend income falling in the higher rate band?
Dividend income in the higher rate band is taxed at 33.75%. The 40% rate applies to non-savings and savings income, while dividends have their own rates of 8.75%, 33.75% and 39.35% for the basic, higher and additional bands.
- A33.75%Correct
- B40%
- C39.35%
- D8.75%
Explanation
The dividend rates in the tax tables are 8.75% for the basic rate band, 33.75% for the higher rate band and 39.35% for the additional rate band. 40% is the normal higher rate for non-savings and savings income, so it is wrong for dividends.
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