Dividend Tax Calculator UK rates for the 2026/27 tax year
Work out the tax on your dividends in seconds — for the UK 2026/27 tax year.
If you’re a limited company director or contractor drawing dividends, enter your gross salary and dividend income below. This dividend tax calculator works out your dividend tax liability after the £500 dividend allowance, shows how each pound is taxed across the basic, higher and additional rate bands on top of the income tax on your salary, and gives your net dividend take-home.
Quick reference
Dividend tax rates for the 2026/27 tax year.
Dividends are taxed after your salary, on top of your income tax band, once the £500 dividend allowance is used up — where they land depends on your total taxable income for the year.
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Dividend allowance
£500
Tax-free dividends each year, halved from £1,000 in 2023/24.
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Basic rate
10.75%
Applies up to the £50,270 basic-rate band threshold.
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Higher rate
35.75%
Between £50,270 and £125,140.
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Additional rate
39.35%
Above £125,140, where the personal allowance is gone.
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Personal allowance
£12,570
Tapered by £1 for every £2 earned above £100,000.
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NIC on dividends
0%
Dividends are not subject to National Insurance.
Figures are for the UK 2026/27 tax year. Individual circumstances will vary — talk to us for a tailored view.
Calculation result
Dividend tax due
£—
How it’s taxed
- Dividend income
- £—
- Tax-free dividend allowance (0%)
- £—
- Total dividend tax
- £—
- Net dividends after tax
- £—
- Effective dividend tax rate
- —%
Heads up: dividends are taxed as the top slice of your income, so your salary determines which band they fall into. A small salary plus dividends is usually the most efficient mix — we’ll model yours.
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The method
How the dividend tax calculator works.
Dividends are taxed as the top slice of your income: your salary fills the tax bands first, then your dividends are taxed at whatever band they land in — which is how much dividend tax you end up paying.
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1
Add your gross salary and dividend income together to find your total income for the 2026/27 tax year.
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2
Set your £12,570 personal allowance against your salary first, then your £500 dividend allowance — both are taxed at 0%. What’s left is the taxable income your dividends stack on top of.
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3
Your salary is charged income tax first; the remaining dividends are then taxed at the basic rate (10.75%), higher rate (35.75%) or additional rate (39.35%) for each band they fall into. There’s no National Insurance on dividends.
That’s exactly what this dividend tax calculator does — and why a small salary topped up with regular dividend payments is usually the most tax-efficient mix for a limited company director, keeping the total tax liability low.
Worked example · 2026/27
A director takes a £12,570 gross salary plus £40,000 in annual dividend payments — a £52,570 total income:
- Tax-free dividend allowance (0%)
- £500.00
- £37,200 taxed at 10.75%
- £3,999.00
- £2,300 taxed at 35.75%
- £822.25
- Total dividend tax
- £4,821.25
- Net dividends after tax
- £35,178.75
- Effective dividend tax rate
- 12.05%
Assumes an English, Welsh or Northern Irish taxpayer on the standard personal allowance, after income tax on the salary. Pop your own figures into the dividend tax calculator above.
Three things to check before you draw.
The allowance does a lot of work. The band crossing does more.
Use the £500 allowance in full
Even if your dividends are modest, take at least £500 out — it’s tax-free. Every pound above it is charged at 10.75% or more.
Mind the £50,270 threshold
The jump from 10.75% to 35.75% is the biggest cliff-edge most directors face. Plan around it across a tax year, not month-to-month.
Salary + dividend, not dividend alone
A small salary up to the NI-free threshold, topped up with dividends, is usually cleaner than dividends-only. We’ll model the mix for you.
Dividend tax FAQs
Dividend tax questions, answered.
The things UK company directors ask us most about paying tax on dividends in 2026/27.
How much dividend can I pay myself tax-free?
In 2026/27 the first £500 of dividends is tax-free under the dividend allowance. If your salary or other income doesn’t use up your full £12,570 personal allowance, the unused part can cover more dividends too — so a director with no salary could draw around £13,070 before any dividend tax is due.
What is the dividend tax rate for 2026/27?
After the £500 allowance, dividends are taxed at 10.75% in the basic-rate band (up to £50,270), 35.75% in the higher-rate band (£50,270 to £125,140) and 39.35% above £125,140. The basic and higher rates rose by 2 percentage points from April 2026.
How are dividends taxed?
Dividends are treated as the top slice of your income, so your salary and other income fill the tax bands first and your dividends are taxed at whatever band they fall into. The £500 dividend allowance is taxed at 0%, and dividends don’t attract National Insurance.
How much tax do I pay on dividends?
It depends on your other income, which is why the calculator asks for your salary. As a guide, a director on a £12,570 salary drawing £40,000 of dividends pays £4,821.25 in dividend tax for 2026/27 — an effective rate of about 12%.
Do you pay Corporation Tax on dividends?
Dividends are paid from company profits after Corporation Tax, so Corporation Tax is worked out first and dividends can’t be deducted as a business expense. You then pay personal dividend tax on what you draw, depending on your other income and tax band.
Can I take dividends if my company hasn’t made a profit?
Usually not. A limited company can only pay dividends out of retained, distributable profit. If you draw dividends when there isn’t enough profit, they can be treated as unlawful (illegal) dividends or reclassified as a director’s loan — which can trigger extra tax. It’s worth checking your latest company accounts before declaring a dividend.
How do I pay tax on dividends?
If your dividends are over £500 but no more than £10,000, ask HMRC to change your tax code or report them on a Self Assessment tax return. Above £10,000 you must file a Self Assessment return. Either way, the tax is due by 31 January after the tax year ends.
How is dividend tax calculated?
Add your salary and dividends together, apply your personal allowance and the £500 dividend allowance, then charge the dividend rate for each band your remaining dividends fall into. Our dividend tax calculator runs this calculation for you instantly.
When do you pay dividend tax?
Dividend tax is normally paid through Self Assessment by 31 January following the end of the tax year — so tax on 2026/27 dividends is due by 31 January 2028 — unless HMRC collects it through your PAYE tax code.
Can contractors use this dividend tax calculator?
Yes — it’s built for UK limited company contractors and directors to estimate the personal tax due on dividends, once your salary, personal allowance, dividend allowance and tax bands are accounted for. It doesn’t calculate Corporation Tax, VAT, PAYE, National Insurance or IR35; and if a contract is inside IR35, that income is taxed like employment rather than being available to pay as dividends.
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Software
Joy Pilot — included with every No Worries package.
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