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 |
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.