💹 Dividend Tax Calculator

2026/27 rates · £500 dividend allowance · All tax bands

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Used to determine which dividend rate band applies

Dividend Tax Summary — 2026/27

Total Dividends—
Less: Dividend Allowance−£500
Basic Rate Dividends (8.75%)—
Higher Rate Dividends (33.75%)—
Additional Rate Dividends (39.35%)—
Total Dividend Tax—
Net Dividend (after tax)—
⚠️ 2026/27 rates. Dividends are taxed on top of other income. Report via Self Assessment if dividends exceed £500/year.

Dividend Tax Rates 2026/27

Dividends are taxed at different rates to salary. Every taxpayer has a £500 annual dividend allowance — the first £500 of dividend income each year is tax-free. Above the allowance, dividends are taxed according to which income tax band they fall into when added on top of other income.

Tax BandIncome RangeDividend Rate
Dividend AllowanceFirst £5000%
Basic RateUp to £50,2708.75%
Higher Rate£50,271–£125,14033.75%
Additional RateOver £125,14039.35%

Company Directors and Dividends

Many company directors take a combination of a small salary (up to the NI threshold of £12,570) and dividends to minimise tax. This is because dividends are not subject to National Insurance, making them more tax-efficient than salary for income above the personal allowance. However, dividends can only be paid from company profits after corporation tax.

💡 Example: A director earning £12,570 salary + £37,700 in dividends in 2026/27 would pay approximately £3,218 in dividend tax — saving significantly compared to taking the same total as salary.

Reporting Dividend Income

If your dividend income exceeds £500 in a tax year, you must report it via Self Assessment. Even if you're employed and pay tax via PAYE, dividends above the allowance must be declared. The deadline is 31 January following the end of the tax year.