Dividend Tax Calculator

Work out the tax on your UK dividends for 2026/27.

Total Dividend Income

Other Taxable Income (salary, pensions, etc.)

Before tax but after pension contributions

Personal Allowance Used

Usually £12,570 unless tapered or transferred

Allowance

Basic 8.75%

Higher 33.75%

Additional 39.35%

Dividend allowance (tax-free) £500.00

Tax at basic rate (8.75%) £0.00

Tax at higher rate (33.75%) £0.00

Tax at additional rate (39.35%) £0.00

Total dividend tax £0.00

Effective dividend tax rate 0.00%

2026/27 Dividend Tax Rates

Band	Taxable Income Range	Dividend Rate
Dividend allowance	First £500 of dividends	0%
Basic rate	£12,571 to £50,270	8.75%
Higher rate	£50,271 to £125,140	33.75%
Additional rate	Over £125,140	39.35%

How Dividend Tax Works

Dividends are taxed differently from salary and other earned income. They sit on top of your other income when working out which tax band applies, and they have their own set of rates.

Step 1: Use your dividend allowance

The first £500 of dividend income is tax-free in 2026/27. This applies regardless of your tax band. The allowance was £1,000 in 2023/24 and £2,000 before that.

Step 2: Stack dividends on top of other income

Taxable other income + Dividends = Total income position

Your salary and other taxable income determines where your dividends start in the tax bands. If your salary already takes you into the higher rate band, your dividends will be taxed at 33.75% from the start (after the allowance).

Step 3: Apply the dividend tax rates

Basic: 8.75% | Higher: 33.75% | Additional: 39.35%

Dividends that fall within the basic rate band (up to £50,270 total income) are taxed at 8.75%. Dividends in the higher rate band (up to £125,140) are taxed at 33.75%. Anything above that is taxed at 39.35%.

Why are dividend tax rates lower?

Dividends are paid from company profits that have already been subject to Corporation Tax. The lower rates partly compensate for this double taxation. Company directors often use a combination of low salary and dividends to minimise the overall tax burden, since dividends also avoid National Insurance contributions.

Personal allowance tapering

If your total income (including dividends) exceeds £100,000, your personal allowance is reduced by £1 for every £2 over that threshold. It is fully withdrawn at £125,140. This calculator lets you adjust the personal allowance to reflect tapering.

Dividend Tax FAQs

What is the dividend allowance for 2026/27?

The dividend allowance for the 2026/27 tax year is £500. This means the first £500 of dividend income is tax-free, regardless of which tax band your other income falls into.

What are the UK dividend tax rates for 2026/27?

For 2026/27, dividend tax rates are 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers. These apply after the £500 dividend allowance has been used.

How does other income affect my dividend tax?

Your other taxable income (salary, pensions, rental income etc.) determines where your dividends sit in the tax bands. For example, if your salary already uses the basic rate band up to £50,270, your dividends will be taxed at the higher rate of 33.75%.

Do I pay National Insurance on dividends?

No. Dividends are not subject to National Insurance contributions. This is one reason company directors often take a low salary topped up with dividends, as it reduces the overall tax and NI burden compared to taking everything as salary.

Does the dividend allowance reduce my taxable income?

No. The dividend allowance is a zero-rate band, not a deduction. Your dividends still count towards your total income for the purpose of determining which tax band you fall into. The first £500 is simply taxed at 0% rather than being excluded from the calculation.