Precision Utility
Dividend Tax Calculator 2026/27 — UK Rates & Allowance
Dividend Allowance
£500
Tax Year
2026/27
Calculate your UK dividend tax for 2026/27. Enter your salary and dividend income to see how dividends are taxed on top of your other earnings. The calculator applies the £500 dividend allowance and shows tax at 8.75%, 33.75% and 39.35% across each band.
Your Income
Total Dividend Tax
£0
Salary Tax
£0
Net Income
£0
Effective Div Rate
0%
Total Tax
£0
Basic (8.75%)
£0
Higher (33.75%)
£0
Additional (39.35%)
£0
Allowance Used
£500
How the dividend tax calculator works
Enter your annual salary (non-dividend income) and your total dividend income. The calculator first works out income tax on your salary using standard HMRC bands, then stacks your dividends on top to determine which dividend tax band they fall into.
The £500 dividend allowance is automatically deducted. Dividends within this allowance are tax-free regardless of your income level. Any dividends above the allowance are taxed at 8.75% (basic), 33.75% (higher) or 39.35% (additional) depending on which band they fall into.
Your salary determines where your dividends start being taxed. If your salary already uses up the basic rate band (£12,571–£50,270), your dividends will be taxed at the higher rate from the first pound above the allowance.
What you need to know about dividend tax 2026/27
Dividend tax applies to income from shares in a company, including dividends from your own limited company. The rates are lower than income tax because company profits have already been subject to Corporation Tax. Here are the key rates:
- Dividend Allowance: £500 tax-free (reduced from £1,000 in 2023/24)
- Basic rate: 8.75% on dividends in the £12,571–£50,270 band
- Higher rate: 33.75% on dividends in the £50,271–£125,140 band
- Additional rate: 39.35% on dividends above £125,140
Salary vs dividends: For company directors, a low salary at the NI threshold (£12,570) plus dividends is often the most tax-efficient approach. Dividends are not subject to National Insurance, saving both employee NI (8%) and employer NI (15%).
For income tax on salary only, use our income tax calculator. For the latest dividend rates, see the official HMRC dividend tax page on GOV.UK.
Dividend tax examples 2026/27
Three worked examples showing how dividend tax is calculated at different income levels.
£10,000 dividends on a basic rate salary (£30,000)
Total income: £40,000 — salary uses PA (£12,570) and part of the basic rate band
Dividend allowance: £500 tax-free
Remaining £9,500 taxed at basic dividend rate: £9,500 × 8.75% = £831.25
Total dividend tax: £831.25 | Effective dividend rate: 8.3%
£30,000 dividends as company director (£12,570 salary + dividends)
Salary: £12,570 (covered by PA — no income tax or NI)
Dividends stacked on top: £12,571–£42,570 is within the basic rate band
Dividend allowance: £500 tax-free
Remaining £29,500 at 8.75% = £2,581.25
Total tax on £42,570 income: £2,581.25 | No NI on dividends
Compare this to taking £42,570 as salary: you would pay £5,994 in income tax + £2,400 in NI = £8,394.
£60,000 total income split (£12,570 salary + £47,430 dividends)
Salary: £12,570 (PA covers it — zero tax)
Dividend allowance: £500 tax-free
Basic rate dividends: £12,571–£50,270 = £37,200 at 8.75% = £3,255.00
Higher rate dividends: £50,271–£60,000 = £9,730 at 33.75% = £3,283.88
Total dividend tax: £6,538.88 | Effective rate on dividends: 13.8%
Taking £60,000 as pure salary would cost £11,432 in tax + £3,883 in NI = £15,315 total.
Frequently asked questions
What is the dividend allowance for 2026/27?
The dividend allowance for 2026/27 is £500. The first £500 of dividend income is tax-free regardless of your tax band. It was reduced from £1,000 in 2023/24 and from £2,000 in 2022/23.
What are the dividend tax rates for 2026/27?
Basic rate 8.75%, higher rate 33.75%, additional rate 39.35%. These apply to dividends above the £500 allowance, depending on which income tax band the dividends fall into.
How are dividends taxed on top of my salary?
Dividends are stacked on top of your salary. Your salary uses up your personal allowance and basic rate band first. Dividends are then taxed at the dividend rate for whatever band they fall into.
Is it better to take a salary or dividends?
For company directors, a combination of low salary (around £12,570) plus dividends is often most tax-efficient. Dividends are not subject to National Insurance, saving both employee NI (8%) and employer NI (15%).
Do I pay National Insurance on dividends?
No. Dividends are not subject to National Insurance contributions. NI is only charged on employment or self-employment income. This is one of the key tax advantages of dividend income.
How does the dividend allowance work with the personal allowance?
They are separate. The personal allowance (£12,570) covers all income including salary. The dividend allowance (£500) is an additional tax-free amount that applies only to dividend income, on top of your personal allowance.
How much tax do I pay on £10,000 in dividends?
It depends on your other income. If your salary already uses the basic rate band, £500 is covered by the dividend allowance and the remaining £9,500 is taxed at 33.75% (£3,206.25). If your dividends fall within the basic rate band, only 8.75% applies to £9,500 (£831.25). The rate depends on which band your dividends land in after stacking on top of your salary.
What is the most tax-efficient salary and dividend split?
For most company directors, a salary of £12,570 (the Personal Allowance) plus dividends is the most tax-efficient approach. This avoids income tax on salary, avoids employee NI entirely, and means dividends are taxed at just 8.75% within the basic rate band. You avoid employer NI (15%) on dividends too, saving the company money as well.
Do I need to file a tax return for dividends?
If your dividends are above the £500 allowance, you usually need to file a Self Assessment tax return. The exception is if all your dividend income falls within the allowance. HMRC may also contact you if dividend tax is owed and ask you to complete a return. Company directors who take dividends almost always need to file.
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