We present a generalized theory for studying phase separation in blends of polymers containing dipoles on their backbone. The theory is used to construct coexistence curves and to study the effects of dipolar interactions on interfacial tension for a planar interface between the coexisting phases. We show that a mismatch in monomeric dipole moments, or equivalently a mismatch in the dielectric constant of the pure components, leads to destabilization of the homogeneous phase. Corrections to the Flory-Huggins phase diagram are predicted using the theory. Furthermore, we show that the interfacial tension increases with an increase in the mismatch of the dipole moments of the components. Density profiles and interfacial tensions are constructed for diffuse and sharp polymer polymer interfaces by extending the formalisms of Cahn-Hilliard and Helfand Tagami Sapse, respectively.