Dividend Tax Calculator 2026/27
The first £500 of dividends each year is tax-free. Above that, 2026/27 rates are 10.75% basic, 35.75% higher and 39.35% additional, up 2 points from April 2026. Other income fills the bands first. Enter income and dividends below for the exact tax due.
Figures verified against HMRC Income Tax rates on .
Written by James HartleyCIMA
Calculator
Enter any non-dividend income. This fills up the basic rate band first before dividends.
Total dividends received from UK or overseas companies.
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How Dividend Tax Calculator 2026/27 Works
Dividends are taxed after all other income has filled up the rate bands. So if you earn £40,000 in salary, you have £10,270 of basic rate band remaining before your dividends start hitting the higher rate.
Dividend allowance
The first £500 of dividends each year is tax-free. This is a separate allowance from the personal allowance and applies regardless of your income tax band.
Why dividends are efficient
Despite the 2 percentage point increase for basic and higher rate taxpayers, dividends remain more tax-efficient than salary above the NI threshold because they are not subject to National Insurance contributions. The headline rates (10.75% to 39.35%) are still lower than income tax rates at each band. However, dividends can only be paid from company profits after corporation tax.
Dividends for company directors and limited company owners
If you are a company director or run a limited company, dividends are often part of how you pay yourself, usually alongside a salary. The same dividend tax rates and the same £500 dividend allowance apply, but the most tax efficient mix of salary and dividends depends on your wider situation, including your Personal Allowance, National Insurance, and the corporation tax paid on company profits before dividends can be drawn. Dividends can only be paid from profit after corporation tax, so the best split is rarely all dividends or all salary. For a full breakdown of how to balance the two, see our guide to taking a salary versus dividends at /blog/salary-vs-dividend-uk/.
Frequently Asked Questions
The dividend allowance for 2026/27 is £500. This means the first £500 of dividends you receive are tax-free regardless of your income tax band. The allowance was reduced from £1,000 in 2023/24 and from £5,000 in 2017/18.
For the 2026/27 tax year, dividend tax rates are 10.75% (basic rate), 35.75% (higher rate), and 39.35% (additional rate). The basic and higher rates each increased by 2 percentage points from April 2026. The £500 dividend allowance remains unchanged.
No. National Insurance is only charged on employment income and self-employed profits. Dividends are not subject to NI. This is why limited company directors often take a low salary (to the NI threshold) and top up with dividends, though this requires trading profitably enough to distribute dividends.
If your total dividend income exceeds the allowance and you're a basic rate taxpayer, HMRC will collect tax via an adjustment to your PAYE code. If you need to pay higher or additional rate tax on dividends, you must file a self assessment return. You always need to report dividends over £10,000.
A basic rate taxpayer receiving £30,000 in dividends (above the £500 allowance) will pay an additional £590 compared to 2025/26. A higher rate taxpayer receiving the same amount will pay the same additional £590. The increase is £20 per £1,000 of taxable dividends for both basic and higher rate taxpayers.
If you are a company director with retained profits, taking dividends before 6 April 2026 locks in the lower 2025/26 rates. From 6 April 2026, rates are 10.75% (basic), 35.75% (higher), and 39.35% (additional). Consult your accountant to balance timing against your company's cash flow needs.
Directors pay dividend tax at the same rates as everyone else, which for 2026/27 are 8.75 percent at the basic rate, 33.75 percent at the higher rate, and 39.35 percent at the additional rate, after the £500 dividend allowance. Dividends can only be paid from company profits after corporation tax, and many directors combine a modest salary with dividends to manage their overall tax and National Insurance. Our salary versus dividends guide explains the most efficient mix.
It depends on your total income, your Personal Allowance, National Insurance, and the corporation tax paid on company profits. Dividends carry no National Insurance and are taxed at lower headline rates than salary, but they come from profit after corporation tax, so the best balance varies from person to person. Our guide to salary versus dividends works through the trade-off in detail.
Related Guides
Salary vs Dividends 2026/27 for Directors
How company directors split salary and dividends, employer NI, and the Employment Allowance rules explained.
Read guideCorporation Tax Rates 2026/27: Everything You Need to Know
Small profits rate, main rate, and marginal relief explained for 2026/27.
Read guideWas this calculator helpful?
Official Rates Used
This calculator uses official HMRC rates for 2026/27. View the current rates at GOV.UK:
Rates last verified:
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.