Dividend band thresholds lag the main-rate bands: HRT £37,700 from 2021 and ART £125,140 from 2023 only applied to dividends from April 2026

Surfaced by the Scorecard's OBR policy-costings lane (PolicyEngine/policyengine-scorecard#56) while assumption-matching PE-UK reversal legs to OBR's Table 3.19 counterfactual thresholds.

What the parameters say (policyengine-uk 2.89.2, parameters/gov/hmrc/income_tax/rates/dividends.yaml)

• dividends[1].threshold (dividends higher-rate threshold, band width): 2015-04-01: 37_500, then 2026-04-06: 37_700.
• dividends[2].threshold (dividends additional-rate threshold): 2015-04-01: 150_000, then 2026-04-06: 125_140.

What the law says

Dividend income sits in the same bands as other income (ITA 2007 s.13 taxes dividend income by reference to the basic/higher/additional rate limits). The basic-rate limit has been £37,700 since 6 April 2021 (Finance Act 2021 s.5, frozen since), and the additional-rate threshold was cut from £150,000 to £125,140 from 6 April 2023 (Finance (No. 2) Act 2023 / AS2022 measure) for all income including dividends. The main uk[1] / uk[2] thresholds in rates/uk.yaml carry these dates; the dividend schedule lags them by up to five years.

Effect

For tax years 2021-22 → 2025-26 (PE calendar years 2021–2025): dividend income in the £37,500–£37,700 taxable band is taxed at the higher dividend rate one notch early (£200 band), and dividend income between £125,140 and £150,000 is taxed at the higher dividend rate instead of the additional dividend rate for 2023-24 → 2025-26. Small in aggregate; wrong for the affected taxpayers, and it breaks assumption-matched reversals of the additional-rate-threshold cut for pre-2026 years (the reversal only "takes" for the dividend leg from 2026-04-06).

Suggested fix

In dividends.yaml: add 2021-04-06: 37_700 to dividends[1].threshold and 2023-04-06: 125_140 to dividends[2].threshold (with references to FA 2021 s.5 and the AS2022 measure), leaving the 2026 entries redundant-but-harmless or removing them. Happy to open the PR if that's easier than a drive-by — say the word.

Found by adversarial review of the scorecard lane (Sol, 2026-08-17), verified against the installed parameter files.

Start with gov/hmrc/income_tax/rates/dividends.yaml and compare its dividend thresholds with the dated entries in rates/uk.yaml. Update the two dividend threshold schedules with the stated effective dates and legal references, then verify that the 2021–2025 and 2023–2025 periods use the matching main-rate bands and that the 2026 entries remain consistent.