UK Dividend Tax Calculator
Calculate UK dividend tax for 2026-27 at the new 10.75% and 35.75% rates, with the £500 allowance and the salary-plus-dividend split company directors actually use.
How to use this calculator
- 1Enter the total dividends you received in the tax year.
- 2Enter your salary and any other income, since dividends are taxed on the bands sitting above it.
- 3Leave the comparison on to see how much the April 2026 rate rise added.
- 4Check the band table — a dividend that straddles a threshold is taxed at two different rates, not one.
How the calculation works
Dividends stack on top of other income. The first £500 is taxed at 0%; the rest is taxed at 10.75%, 35.75% or 39.35% depending on which band it falls into- dividend allowance
- £500 nil-rate band — it uses up band space rather than reducing income
- stacking
- Salary fills the lower bands first, so dividends are taxed at the rates sitting above it
The basic and higher dividend rates rose by two percentage points on 6 April 2026, from 8.75% and 33.75% to 10.75% and 35.75%. The additional rate is unchanged at 39.35%. Most published guides still show the old figures.
Because the allowance is a nil-rate band rather than a deduction, it never moves income into a lower band. Someone whose dividends straddle the higher-rate threshold gets no help from it in that respect.
Dividends count toward the £100,000 threshold at which the personal allowance begins to taper, so a large dividend can cost allowance on salary that would otherwise have been sheltered.
Worked example
A director on a £12,570 salary taking £40,000 of dividends
- 1.The £12,570 salary uses the whole personal allowance, so all £40,000 of dividends is above it.
- 2.The first £500 falls in the dividend allowance and is taxed at 0%.
- 3.The remaining £39,500 sits inside the basic-rate band, which runs to £37,700 of taxable income — so most is taxed at 10.75% and the rest at 35.75%.
- 4.At last year's 8.75% and 33.75% the same dividend would have cost noticeably less.
Result: Mostly basic rate, with the top slice at the higher rate
What changed on 6 April 2026
The Autumn Budget 2025 raised the basic dividend rate from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%, both effective from 6 April 2026. The additional rate stayed at 39.35%.
Two percentage points sounds modest, but it applies to the whole taxable dividend rather than a slice, so a director taking £40,000 pays several hundred pounds more this year for exactly the same profit extraction. The change matters most to owner-managed company directors, who typically take a small salary and the balance as dividends, and to investors holding shares outside an ISA.
It is worth checking the source of any figure you find elsewhere: a great many guides, spreadsheets and calculators still show 8.75% and 33.75%, which were correct up to 5 April 2026 and are wrong for the current year.
Why the allowance helps less than it looks
The £500 dividend allowance is a nil-rate band, not a deduction, and the distinction has real consequences.
A deduction would reduce your taxable income, potentially pulling other income down into a lower band. The dividend allowance does not: it charges the first £500 of dividends at 0% while still consuming £500 of whichever band it sits in. Someone whose income straddles the higher-rate threshold gets no relief from it on the other side.
The allowance has also shrunk dramatically. It was £5,000 when introduced in 2016-17, fell to £2,000, then £1,000, and now £500. Combined with this year's rate rise, the tax on a given dividend has increased substantially over the last few years without the headline rates moving much at all.
Salary against dividends for company directors
The reason this calculation matters to so many people is the owner-managed company structure: pay yourself a small salary, take the rest of the profit as dividends.
The logic survives the rate rise. Dividends carry no National Insurance at all, where salary attracts 8% employee NI and 15% employer NI. Even at 10.75%, a basic-rate dividend is cheaper than salary once both NI charges are counted. But dividends are paid from post-corporation-tax profit, so the true comparison must include corporation tax on the profit first — which is what makes the honest answer more finely balanced than the headline rates suggest.
A salary at least up to the National Insurance threshold is almost always worth taking regardless, because it preserves a qualifying year for the state pension and keeps the personal allowance in use against income that would otherwise be taxed as dividends.
What this assumes, and where it stops
Assumptions
- 2026-27 rates for the whole UK — dividend tax is not devolved, so Scottish taxpayers use these same rates.
- Dividends stack on top of salary and other non-savings income.
- The full personal allowance applies before any taper, and salary uses it first.
- All dividends are from UK companies held outside an ISA or pension.
Limitations
- Savings income, which has its own starting rate and personal savings allowance, is not modelled and sits between other income and dividends in the stacking order.
- Scottish income tax bands change which dividend band applies for a Scottish taxpayer, since their other income fills the bands differently.
- Corporation tax on the profit the dividend is paid from is not included, so this is not a full extraction comparison.
- The high income child benefit charge and other income-linked withdrawals are excluded.
Common questions
What are the UK dividend tax rates for 2026-27?
10.75% for basic-rate taxpayers, 35.75% for higher-rate and 39.35% for additional-rate, after a £500 tax-free dividend allowance. The basic and higher rates both rose by two percentage points on 6 April 2026 following the Autumn Budget 2025. Many guides still quote the old 8.75% and 33.75% figures, which applied only up to 5 April 2026.
How does the £500 dividend allowance work?
It is a nil-rate band rather than a deduction. The first £500 of dividends is taxed at 0%, but it still uses up £500 of whichever tax band it falls in, so it does not push other income into a lower band. That is why it helps less than an equivalent deduction would, and why shrinking it from £5,000 in 2016-17 to £500 today has raised real bills without any headline rate change.
Is it still worth taking dividends instead of salary?
For most owner-managed company directors, yes — dividends carry no National Insurance, while salary attracts 8% employee and 15% employer NI. Even at the higher 2026-27 rates the dividend route usually wins. But dividends come from post-corporation-tax profit, so a complete comparison has to include corporation tax, which makes the margin narrower than the headline rates imply.
Do Scottish taxpayers pay different dividend rates?
No. Dividend taxation is not devolved, so the 10.75%, 35.75% and 39.35% rates apply across the whole UK. What does differ is the band your dividends land in: Scottish income tax bands are set separately, so a Scottish taxpayer's salary fills the bands differently and can push dividends into a higher dividend rate than the same salary would elsewhere in the UK.
Sources
- Tax on dividends — HM Revenue & Customs
- Direct taxes: Rates and allowances for 2026/27 — UK Parliament, House of Commons Library
Formula and content last reviewed on .
Results are estimates for information only, not professional advice.
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