Calculator
UK Dividend Tax Calculator (2026/27)
Tax on your dividends after the £500 allowance, with band-by-band breakdown and your marginal rate on the next £1. Updated for the 2026/27 rate hike (10.75% basic / 35.75% higher / 39.35% additional).
Reviewed 27 April 2026 · 2026/27 rates verifiedNet annual (after all tax)
£47,749
£3,979/month · effective 9.2% · marginal on next £1 of dividends 35.8%
Show full breakdown
Where your money goes
| Salary (gross) | £12,570.00 |
|---|---|
| Dividends (gross) | £40,000.00 |
| Total income | £52,570.00 |
| Personal allowanceAllocated to salary first, then dividends | £12,570.00 |
| Dividend allowanceFirst £500 of dividends taxed at 0% | £500.00 |
| Dividend tax @ 10.8%£37,200.00 in band | −£3,999.00 |
| Dividend tax @ 35.8%£2,300.00 in band | −£822.25 |
| Total dividend tax | −£4,821.25 |
| Total tax + NI + SL | −£4,821.25 |
| Net annual | £47,748.75 |
How dividend tax actually works
Dividend tax is a separate tax schedule from income tax, same bands, different rates, paid via self-assessment. The key point: dividends sit ON TOP of your salary for band-position purposes, so what rate you pay depends on how much salary you already have.
The £500 dividend allowance
The first £500 of dividends is taxed at 0%. It used to be £2,000 (until 2023), then £1,000 (2023/24), now £500 (2024/25 onwards). It's a nil-rate band, so it occupies its £500 of band space even though no tax is due on it.
The three rates
On taxable dividends above the allowance, three rates apply in 2026/27: 10.75% in the basic-rate band (up to £37,700 of total taxable income above the personal allowance), 35.75% in the higher band (up to £125,140), and 39.35% in the additional band. Both basic and higher went up by 2pp at Autumn Budget 2025.
How salary “eats up” the basic band
If you earn £40,000 of salary, your salary alone uses (£40,000 − £12,570) = £27,430 of the £37,700 basic-rate band. Your first £10,270 of dividends fall in the basic band at 10.75%; everything above goes to higher-rate at 35.75%. By contrast, a £12,570 salary leaves the entire basic band free , your first £37,200 of taxable dividends (after the £500 allowance) all sit at 10.75%. This is why a £12,570 director salary is the standard Ltd strategy.
The £100k taper trap
Above £100,000 of total income (salary + dividends), your personal allowance reduces by £1 per £2 over the threshold, disappearing completely at £125,140. Inside this band the marginal rate on dividends climbs to about 47.4% once you account for the lost PA pushing more of your salary and dividends through higher bands. Above £125,140 the PA is gone, the taper effect ends, and the marginal rate drops back to the additional-rate dividend rate of 39.35%.
How dividends are paid to HMRC
Dividends are paid gross, the company doesn't withhold tax. You declare them on your self-assessment, HMRC computes the dividend tax owed, and you settle the balance by the following 31 January (with payments on account if your liability exceeds £1,000). Keep dividend vouchers from the company (date, amount, shareholder), HMRC may ask for them.
What this calculator doesn't cover
- Pension contributions: deferred to Phase 3.5. Salary-sacrifice and personal pension contributions both reduce your tax bill but are mechanically distinct.
- Dividends from foreign companies: usually taxed the same way for UK residents, but withholding tax in the source country may give you a foreign tax credit. Speak to a tax adviser.
- Stock dividends / scrip dividends: usually treated as ordinary cash dividends at market value on issue.
- ISA dividends: completely tax-free, don't enter them here.
- VCT / EIS dividends: VCT dividends are tax-free; EIS dividends are normal-rate. Not modelled.
- Capital gains: separate tax (CGT). Selling shares triggers CGT, not dividend tax.
- Marriage allowance / blind person's allowance , small adjustments not modelled.
- High-Income Child Benefit Charge: claws back child benefit between £60k and £80k of adjusted net income. Total income from this calculator counts toward the threshold.
Frequently asked questions
- What are the dividend tax rates for 2026/27?
- Three rates after the £500 dividend allowance: 10.75% basic-rate (up to £37,700 of taxable income above your personal allowance), 35.75% higher-rate (£37,700 to £125,140), and 39.35% additional-rate (above £125,140). The basic and higher rates went up by 2pp at Autumn Budget 2025; they were 8.75% and 33.75% in 2025/26. The additional rate is unchanged.
- How does the £500 dividend allowance work?
- It's a nil-rate band, not a deduction. The first £500 of dividends is taxed at 0%, but it still occupies its £500 of band space, so it pushes your remaining dividends up by £500 of band position. Practically that means most people just see it as 'no tax on the first £500 of dividends'. The allowance shrank from £2,000 (pre-2023/24) to £1,000 (2023/24) to £500 (2024/25 onwards). It currently looks frozen at £500.
- Why does my salary affect the dividend rate I pay?
- Dividends stack on top of your salary for band-position purposes. If your salary uses up most of the basic-rate band, your dividends start near the top of basic and quickly tip into higher-rate dividend tax (35.75%). At the £12,570 personal-allowance salary, the basic-rate band sits empty for dividends, so your first £37,700 of dividends are at the lower 10.75% rate. This is exactly why limited company directors typically pay themselves £12,570 and the rest as dividends.
- Are dividend tax rates different in Scotland?
- No, dividend tax is set by Westminster, not Holyrood. Scottish residents pay 10.75% / 35.75% / 39.35% on dividends just like rUK residents. They also use the rUK band caps (£37,700 / £125,140) for dividend tax purposes, even though their salary is taxed under the six-band Scottish schedule. This is a deliberate quirk: Scotland gets devolved control over earned-income rates only.
- What's the personal allowance taper, and how does it affect dividends?
- Above £100,000 of total income (salary + dividends combined), your personal allowance shrinks by £1 for every £2 over the threshold, hitting zero at £125,140. The PA is allocated to salary first, with any leftover going to dividends. As the PA shrinks, more of your salary becomes taxable AND more of your dividends move up the band schedule, both effects compound. Inside this £100k–£125,140 zone the marginal rate on each extra £1 of dividends can hit 47.4%.
- Why is the marginal rate so high above £100k?
- Each extra £1 of dividend income (a) gets taxed at the band you're in (typically higher 35.75% through this zone) AND (b) reduces your personal allowance by £0.50, which means £0.50 of salary that was previously at 0% is now taxed at 20% basic (extra 10p) PLUS £0.50 of dividends move up the schedule. The combined marginal rate works out around 47.4% in the taper zone, then drops back to 39.35% above £125,140 once the PA is fully gone.
- Do student loans apply to dividends?
- Yes, student loan repayments are calculated on your total income, including dividends. HMRC sees dividends as income for SL purposes (just not for NI). If you're on Plan 2 (£29,385 threshold in 2026/27) and have £15k of salary plus £30k of dividends, you owe 9% × (£45,000 − £29,385) = £1,405/year of student loan repayment, settled via your self-assessment. Multiple-plan stacking and Postgrad rules apply the same way as for salaried income.
- How does this differ from your outside-IR35 Ltd calculator?
- This calculator is the personal-side only, it assumes you're already deciding to take £X salary and £Y dividends, and just shows the personal tax on that combination. The outside-IR35 Ltd calculator runs the full company chain: revenue minus salary minus employer NI minus expenses minus corporation tax, then feeds the resulting dividend figure into the same personal-tax engine you see here. Use this calculator when you already know your dividend amount; use the Ltd calculator when starting from a day rate.
Related calculators
Outside IR35 (Ltd)
Full Ltd money flow from day rate to net.
Umbrella vs Limited
Side-by-side comparison at the same day rate.
Take-home pay (PAYE)
Salary-only deduction chain.
Related guides
Pension via limited company
How employer pension contributions extract profit at a 1.5–2× multiplier vs taking dividends.
Coming soon
The £100k personal allowance trap
Why the marginal rate hits 60–70% in the taper zone.
Reviewed: 27 April 2026 · See how we calculate · not financial advice.