Dividend Tax Calculator
Work out the UK tax on your dividends for 2026/27. Enter your salary or other income and your dividends — the calculator stacks the dividends on top of your income, applies the £500 allowance, splits the rest across the basic, higher and additional bands, and shows how much extra the April 2026 rate rise costs you compared with 2025/26.
£4,821.25 dividend tax (2026/27)
Effective rate: 12.1% · Tax-free dividends: £500.00 · Taxed: £39,500.00
Income tax on your salary: £0.00 · Total income: £52,570
April 2026 rate rise: you pay £790.00 more dividend tax than under 2025/26 rates (£4,031.25).
Dividend tax by band
| Band | Dividends in band | Rate | Tax |
|---|---|---|---|
| Tax-free | £500.00 | 0.00% | £0.00 |
| Basic rate | £37,200.00 | 10.75% | £3,999.00 |
| Higher rate | £2,300.00 | 35.75% | £822.25 |
| Total | £39,500.00 | £4,821.25 |
England, Wales & Northern Ireland; salary and dividends only (employee NI not included). The £500 dividend allowance is tax-free but still uses up band space. Rates: GOV.UK (from 6 April 2026). How we calculate →
How dividend tax works in the UK
Dividends are taxed as the top slice of your income, on top of your salary and any other earnings. To find the rate you pay, you add your dividend income to your other income and see which Income Tax band the dividends fall into. The same dividends can be split across more than one band, so part may be taxed at the basic rate and part at the higher rate — this calculator does that split for you and shows the working.
You do not pay National Insurance on dividends, which is why taking some income as dividends can be more tax-efficient for company directors than salary alone. Dividends inside an ISA are completely tax-free and are ignored here.
Dividend tax rates for 2026/27 (and how they changed)
From 6 April 2026 the dividend rates rose by 2 percentage points at the basic and higher bands (the additional rate is unchanged): basic 10.75%, higher 35.75% and additional 39.35%. In 2025/26 the rates were 8.75%, 33.75% and 39.35%. Switch the tax year above to compare, and the calculator shows exactly how much extra the April 2026 rise costs you at your income level.
The bands themselves are set by your total income: the basic-rate band covers taxable income up to £50,270, the higher-rate band runs to £125,140, and anything above £125,140 is taxed at the additional rate.
The £500 dividend allowance
Everyone gets a £500 dividend allowance each year, taxed at 0%. It has fallen sharply from £5,000 in 2017/18 to £500 today. Importantly, the allowance still uses up band space: the £500 sits at the bottom of your dividend slice, so it can push the rest of your dividends towards a higher band even though no tax is charged on the allowance itself.
If part of your Personal Allowance is unused by your salary, that spare amount also covers your dividends tax-free before the £500 allowance is applied.
How much extra you pay in 2026/27 vs 2025/26
Because only the rates changed, the extra tax is straightforward to work out: it is your taxed dividends multiplied by the 2-point rise in each affected band. A director on a £12,570 salary taking £37,700 of dividends to fill the basic band pays around £744 more in 2026/27. The most anyone pays purely from the rise is about £2,492, where all income is dividends and both the basic and higher bands are full. The calculator shows your own figure under the result.
Salary plus dividends: the director's mix
Many company owners take a small salary plus dividends. The most tax-efficient salary for a single-director company is usually £12,570 (your Personal Allowance), with the rest drawn as dividends — keeping salary low avoids most National Insurance while still using the full Personal Allowance. Enter your salary and planned dividends above to see the combined Income Tax and dividend tax, and the effective rate on your dividends.
Dividends and your Personal Allowance
Your £12,570 Personal Allowance is set against your salary first; any unused part then shelters your dividends. Once your total income passes £100,000, the Personal Allowance is reduced by £1 for every £2 of income above that, and disappears entirely at £125,140 — creating an effective 60% marginal band on that slice of income. The calculator tapers the allowance automatically and shows the reduced figure when it applies.
Frequently asked questions
How much tax do I pay on dividends?
You pay nothing on the first £500 (the dividend allowance), then the rate depends on your Income Tax band. For 2026/27 the rates are 10.75% (basic), 35.75% (higher) and 39.35% (additional). Dividends are added on top of your other income to decide the band, so you may pay more than one rate.
What is the dividend allowance for 2026/27?
The dividend allowance is £500 for 2026/27, unchanged from 2025/26. The first £500 of dividends is tax-free, but it still uses up part of your tax band, which can affect how the rest of your dividends are taxed.
Do I pay tax on dividends in an ISA?
No. Dividends from shares held in a Stocks and Shares ISA are completely tax-free and do not count towards your dividend allowance or your Income Tax bands. This calculator only covers dividends held outside an ISA.
How are dividends taxed on top of my salary?
Your salary is taxed first using your Personal Allowance and Income Tax bands. Dividends are then stacked on top: any Personal Allowance left over after your salary covers them tax-free, then the £500 allowance, then the dividend rate for whichever band they fall into. The calculator shows this split band by band.
What are the dividend tax rates from April 2026?
From 6 April 2026 the rates are 10.75% at the basic rate, 35.75% at the higher rate and 39.35% at the additional rate — a 2-percentage-point rise at the basic and higher bands compared with 2025/26, with the additional rate unchanged.
Do dividends count towards the Personal Allowance?
Yes. Dividends are part of your total income, so they count when working out whether your income exceeds £100,000 (where the Personal Allowance starts to taper) and £125,140 (where it is lost). Any Personal Allowance not used by your salary can be set against your dividends tax-free.
Researched & verified by the Calcuris Data & Research Team. How we build and check our tools →