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Dividend Tax Calculator
The tax on your dividends at the 2026/27 rates, band by band, on top of your other income
Dividend Tax Calculator 2026/27
How much tax will you pay on your dividends?
Dividends sit on top of your other income and are taxed in the band they land in. The rates rose in April 2026. Enter your salary and your dividends and see the bill, band by band.
Based on tax rates and allowances in England, 2026/27
Salary, pension income, rental profit, savings interest. Not dividends.
What the numbers say
Enter your other income and your dividends to see the tax, band by band.
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How your dividends are taxed
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Illustrative only, not financial advice. Based on tax rates and allowances in England, 2026/27. Personal allowance £12,570, reduced by £1 for every £2 of income over £100,000. Dividend allowance £500. Dividend rates 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% above £125,140, all up two points from April 2026. Other income is taxed first and fills the bands before dividends. Other income is treated as earnings for the income tax line, so savings interest and its allowances are not modelled separately. Scottish rates apply to earnings but dividend rates are UK-wide. The results depend entirely on what you enter and your circumstances may differ. Talk your figures through with us, the first conversation is free.
Dividend tax went up in April 2026. Here is what that means
From 6 April 2026 the dividend rates rose by two points. Basic rate is now 10.75%, higher rate 35.75% and additional rate stays at 39.35%. The £500 dividend allowance is unchanged. For an owner-director taking £50,000 of dividends on a £12,570 salary, that is about £1,000 more tax than last year.
Dividends are taxed last. Your salary, pension and rental income fill the personal allowance and the tax bands first, and dividends land on top. The calculator above works through that order and shows how much of your dividend income sits in each band.
The rise changes the old advice for company owners. At 2026/27 rates, once corporation tax is counted, salary can now beat dividends for a higher rate taxpayer. Our salary vs dividend calculator runs that comparison. If your total income is near £100,000, the income tax relief modeller shows how a pension contribution restores the personal allowance. Business owners planning an exit will also want the Business Asset Disposal Relief calculator.
Frazer James is an independent, FCA-regulated firm of Certified Financial Planners. Advice covers the whole of the market, there is no initial fee, and the first meeting is free.
Dividends are taxed last
Other income uses the allowance and the bands first. With no other income, £50,000 of dividends means £3,970 of dividend tax. If your salary already fills the basic rate band, for example £60,000, it is about £17,700.
The £500 allowance still uses up band
The first £500 is taxed at 0%, but it still counts towards the basic rate limit. It is a nil rate, not an exemption.
Two points changes the answer
At 35.75% the higher rate on dividends is now close to the total cost of salary. For many owner-directors the traditional low salary, high dividend mix no longer wins.
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Questions people ask about dividend tax
What are the dividend tax rates for 2026/27?
Basic rate 10.75%, higher rate 35.75% and additional rate 39.35%. The first £500 of dividends is covered by the dividend allowance at 0%. The basic and higher rates each rose by two points from 6 April 2026.
How much dividend can I take tax-free?
The dividend allowance is £500. On top of that, any personal allowance not used by other income covers dividends too. Someone with no other income could take £13,070 of dividends before paying any tax. Most owner-directors take a salary that uses the allowance, so £500 is the practical figure.
Do dividends count towards the £100,000 personal allowance taper?
Yes. Adjusted net income includes dividends. Once total income passes £100,000 the personal allowance falls by £1 for every £2, and it is gone at £125,140. The calculator flags this when it applies. A pension contribution reduces adjusted net income and can restore the allowance.
Is it still better to take dividends than salary?
Not always, since April 2026. Dividends come out of profit that has already paid corporation tax at up to 25%. Add 35.75% dividend tax and the combined rate is higher than salary for a higher rate taxpayer. At basic rate dividends still win comfortably. Our salary vs dividend calculator runs your own figures.
When do I pay dividend tax?
Through self assessment. Dividends received in 2026/27 are reported on the return due by 31 January 2028, with the tax paid by the same date. If you owe more than £1,000 you may also have to make payments on account for the following year.
Reviewed by
BSc, MLIBF, PETR, Chartered ALIBF · Co-Founder and Chartered Associate
Chris has spent over a decade in financial planning and specialises in research and technical analysis. He checks every figure and calculation on this page before it is published.
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