Increase dividend tax rates by 2pp (November 2025 Autumn Budget) #1383
Description
Summary
The November 2025 Autumn Budget increases dividend income tax rates by 2 percentage points from April 2026.
Policy Details
From the OBR Economic and Fiscal Outlook November 2025:
- Effective date: April 2026
- Basic rate: Increases from 8.75% to 10.75%
- Higher rate: Increases from 33.75% to 35.75%
- Revenue: Estimated to yield £1.2 billion a year on average from 2027-28
Behavioral Effects Noted by OBR
- Individuals expected to reduce taxable dividend income in response
- Reduced incentive to incorporate to reduce tax liabilities (offsets behavioral reduction)
- Forestalling effect: £0.3 billion of tax liabilities brought forward to 2025-26, unwinding over following two years
Implementation Required
Update dividend tax rate parameters:
gov.hmrc.income_tax.rates.dividends(basic rate: 8.75% → 10.75%)gov.hmrc.income_tax.rates.dividends(higher rate: 33.75% → 35.75%)
Note: Additional rate at 39.35% is not mentioned as changing.
Source
OBR Economic and Fiscal Outlook November 2025, Chapter 3 (Policy measures), paragraph 3.33, Table 3.5
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