Dividend Tax Calculator United Kingdom

Dividends from shares, funds or your own company are taxed more lightly than salary, but they are not tax-free, and for 2026/27 the rates went up. This calculator works out what you owe on your dividends this tax year, allowing for the dividend allowance, any unused personal allowance and how your dividends stack on top of your other income.

How dividend tax works

Dividends are always treated as the top slice of your income, so the rate you pay depends on how much other income (salary, pension, rent) you already have. Your other income fills the tax bands first; your dividends sit on top and are taxed at the dividend rate for whichever band they fall in. The same £10,000 of dividends can be taxed at the ordinary rate for a basic rate earner and at the upper rate for someone already above the higher rate threshold.

Two tax-free layers come first. If your other income does not use up your whole personal allowance, the spare part covers dividends. Then everyone gets a separate dividend allowance taxed at 0%. Only dividends above both are taxed.

The rates for 2026/27

The Autumn Budget 2025 raised the dividend rates by two percentage points from 6 April 2026. The ordinary dividend rate is 10.75%, the upper rate is 35.75% and the additional rate stays at 39.35%. The dividend allowance remains £500. These rates are still below the Income Tax rates on salary of 20%, 40% and 45%, so taking income as dividends rather than salary remains attractive for company owners, though the gap has narrowed.

The dividend allowance

The £500 dividend allowance is a 0% band, not a deduction like the personal allowance, so it still uses up part of the band your dividends fall into. In practice the first £500 of dividends above your personal allowance is tax-free and the rest is taxed at the dividend rates. The allowance has been cut steeply from £2,000 in 2022/23, so many more small investors now pay some dividend tax. The calculator applies it automatically.

Salary versus dividends for company directors

Many limited company owners pay themselves a small salary plus dividends. The salary is a deductible business expense and, at the right level, builds a qualifying year for the State Pension while attracting little or no Income Tax or National Insurance. Dividends are paid from profit after Corporation Tax and then taxed on the individual. Because dividends carry no National Insurance, a pound of dividend is usually taxed less than a pound of salary, but the 2026/27 rate rise and the higher Corporation Tax since 2023 mean the best split is worth recalculating. Use this tool for the personal dividend tax, then compare it with the Income Tax and National Insurance on the same amount as salary.

A worked example

You receive £10,000 of dividends and have £30,000 of salary. The salary uses your whole personal allowance and part of the basic rate band. The first £500 of dividends is covered by the dividend allowance. The remaining £9,500 still sits within the basic rate band, so it is taxed at 10.75%, giving dividend tax of £1,021.25, an effective rate of just over 10% on the whole £10,000, and you keep £8,978.75. With a salary of £60,000 instead, the same £9,500 falls in the higher rate band and is taxed at 35.75%, so the bill rises to £3,396.25.

How to use the calculator

Enter your annual dividend income and your other income before tax. The result shows the dividend tax due, how much is covered by the allowances, the taxable dividends and how they split across the ordinary, upper and additional rates, your effective rate and what you keep. Use it to plan a dividend before you take it, to judge whether to hold shares in an ISA, where dividends are tax-free, or to model a director’s pay.

Assumptions and limitations

This is a planning estimate, not a tax return. It uses the 2026/27 dividend allowance and rates and reduces the personal allowance for income above £100,000. It covers dividends held outside tax wrappers; dividends in an ISA or pension are tax-free and should not be entered. It does not model Scottish Income Tax bands on your other income (dividend tax itself uses UK-wide bands), the marriage allowance, or Gift Aid and pension contributions that extend your basic rate band and can lower the rate on your dividends. The allowance and rates are stored as parameters sourced from HMRC and reviewed each tax year.

About This Dividend Tax Calculator

Use this dividend tax calculator to get an instant, accurate estimate. The figures follow official GOV.UK guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.