Dividend Tax Calculator (2026/27)
Dividend tax rates went up by 2 percentage points in April 2026 — many older calculators still show the previous rates. Enter your salary and dividend income to see your dividend tax bill using the confirmed 2026/27 rates: 10.75%, 35.75% and 39.35%. Dividends are always taxed after your other income, so the same dividend can cost very different amounts depending on your salary.
How it works
Dividends sit on top of your other income. Your salary uses up your Personal Allowance and tax bands first; your dividends are then taxed in whichever band they land — 10.75% in the basic band (taxable income up to £37,700), 35.75% in the higher band, and 39.35% in the additional band.
The first £500 of dividends is covered by the dividend allowance, so it is tax-free — but it still occupies space in your tax band, which matters if your dividends straddle a band boundary.
Worked example: £30,000 salary plus £10,000 of dividends. The salary uses the £12,570 Personal Allowance and £17,430 of the basic band, leaving £20,270 of basic-rate space — the dividends fit inside it entirely. The first £500 is covered by the dividend allowance and the remaining £9,500 is taxed at 10.75%: a bill of £1,021.25.
Now the same £10,000 of dividends on a £50,270 salary: the salary exactly fills the Personal Allowance and basic band, so every dividend pound lands in the higher band. After the £500 allowance, £9,500 is taxed at 35.75% — £3,396.25, more than three times the basic-rate bill for identical dividends. This is why the mix of salary and dividends matters so much for owner-directors.
From 6 April 2026, the ordinary rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75% (announced at Autumn Budget 2025). The additional rate stays at 39.35%. If a calculator shows 8.75%, it is out of date.
The calculator shows the dividend tax alone, on top of whatever your salary already pays — dividends attract no National Insurance, which is the core of the salary-versus-dividend argument for company directors. Dividends held inside an ISA are ignored entirely: they are tax-free and never reported. The most common error remains using the pre-April 2026 rates, which understates a basic-rate bill by nearly a fifth.
FAQ
What are the dividend tax rates for 2026/27?
From 6 April 2026: 10.75% at the basic rate, 35.75% at the higher rate, and 39.35% at the additional rate. The first two rose by 2 percentage points at Autumn Budget 2025 — check any figure you see elsewhere against gov.uk, as many pages still show the old 8.75%/33.75% rates.
How much dividend income is tax-free?
The dividend allowance is £500 for 2026/27. Dividends within your unused Personal Allowance are also tax-free. So a person with no other income could receive £13,070 in dividends (£12,570 PA + £500 allowance) before paying any dividend tax.
Do I need to file a tax return for my dividends?
If your dividend income is over £500 (the allowance) but under £10,000, you can ask HMRC to adjust your tax code or declare it via Self Assessment. Over £10,000, a Self Assessment return is required. Dividends inside an ISA are entirely tax-free and never need reporting.
Is salary or dividend better for a limited company director in 2026/27?
The 2-point rate rise narrowed the gap, but a small salary plus dividends usually still beats full salary because dividends avoid National Insurance. The best split depends on company profits and your other income — this calculator shows the dividend tax side of that comparison.
How much tax will I pay on £10,000 of dividends?
After the £500 allowance, £9,500 is taxable: £1,021.25 if it all falls in your basic band (10.75%), £3,396.25 if it all falls in the higher band (35.75%), and £3,738.25 at the additional rate (39.35%). If your dividends straddle a band boundary, each slice is taxed at its own rate — enter your salary and dividends together for the exact split.
Do I pay National Insurance on dividends?
No — National Insurance is not charged on dividends, which is the main reason a small salary plus dividends usually still beats a full salary for limited company directors, even after the April 2026 rate rises. The right mix depends on company profits and your other income, but the NI saving is structural rather than a loophole.
What if dividends are my only income?
With no salary using up the bands, you could receive £13,070 before any dividend tax: the £12,570 Personal Allowance plus the £500 dividend allowance. Above that, dividends are taxed from the basic rate upwards — 10.75% in the basic band — and the calculator handles a zero-salary entry correctly, allocating the allowances before applying any rate.