Dividend tax calculator 2026/27
Dividends are taxed after your other income, so your salary decides which band they fall in. From April 2026 the basic and higher dividend rates went up by 2 points (10.75% and 35.75%); the additional rate stays at 39.35%.
Typical director set-up: salary at the £12,570 personal allowance (no income tax, no employee NI) and the rest as dividends. Dividends inside an ISA are tax-free and should be left out.
| Covered by unused personal allowance | |
| Dividend allowance (0%) | |
| Basic rate (10.75%) | |
| Higher rate (35.75%) | |
| Additional rate (39.35%) | |
| Dividend tax | |
| Income tax on salary | |
| Take-home (salary + dividends − tax) | |
| Effective rate on dividends |
Read: salary vs dividends in 2026/27 →
How dividend tax works in 2026/27
Add your dividends on top of your other income. Any personal allowance you have not used against salary covers dividends first. The first £500 of taxable dividends is the dividend allowance: it is charged at 0% but still counts towards the bands. What is left is taxed at 10.75% up to £50,270 of total income, 35.75% up to £125,140 and 39.35% above that. Dividend tax is paid through Self Assessment by 31 January after the tax year. Employee National Insurance is not charged on dividends, which is why the salary-plus-dividends mix is still cheaper than salary alone for most company directors — the corporation tax already paid by the company is the trade-off.
Assumes England/Wales/NI bands (Scottish rates differ for salary, not for dividends), no student loan, no pension contributions or Gift Aid. Not tax advice.
Frequently asked questions
What are the dividend tax rates for 2026/27?
10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band, after a £500 dividend allowance. The basic and higher rates went up by 2 percentage points in April 2026.
Is the £500 dividend allowance tax-free?
Yes, the first £500 of dividends above any unused personal allowance is taxed at 0% — but it still uses up part of your tax band.
Do I pay National Insurance on dividends?
No. Dividends are not earnings, so neither employee nor employer National Insurance applies, which is why a small salary plus dividends is usually cheaper than salary alone for company directors.
When is dividend tax paid?
Through Self Assessment: the tax on dividends received in 2026/27 is due by 31 January 2028, with payments on account if the bill is over £1,000.