What is the dividend allowance in 2026/27?

£500. It was £1,000 in 2023/24 and halved to £500 from April 2024; unchanged for 2026/27. Dividends within the allowance are tax-free regardless of your other income.

What rate of tax do I pay on dividends?

Dividends above the allowance are taxed based on the income-tax band they fall into: 8.75% (basic), 33.75% (higher), 39.35% (additional). These are UK-wide — Scotland does not set its own dividend rates.

How do dividends interact with my salary?

Your non-dividend income (salary, self-employed profit, etc.) is stacked first and uses Personal Allowance. Dividends sit on top, so the band that applies depends on your total income.

Are dividends from ISAs or pensions taxed?

No — dividends received inside an ISA or pension wrapper are entirely tax-free. This calculator is for unwrapped dividends from company shares held in your own name (e.g. limited-company director's distributions).

Does this cover Scottish taxpayers?

Yes — but note that dividend tax rates and bands are set UK-wide, not by Holyrood. Scottish income-tax bands only apply to non-dividend income.

UK Dividend Tax Calculator — Tax on Dividends 2026/27

Calculate UK tax on dividend income for the 2026/27 tax year. £500 dividend allowance, then 8.75% / 33.75% / 39.35% rates based on your total income band. Stacks correctly on top of any salary.

Last updated 17 April 2026 · Tax year 2026/27

Gross dividends	£10,000
Dividend tax	−£0
Net dividend	£10,000

Take-home pay

£10,000

0.0% effective tax rate

Monthly: £833
Weekly: £192
Daily: £38
Hourly: £5.13

How UK dividend tax works

Dividends from UK shares held outside a pension or ISA are taxed separately from your main income. Three moving parts:

Personal Allowance (£12,570 for most) is used by your other income first. Any left over reduces taxable dividends.
Dividend allowance — £500 in 2024/25, 2025/26 and 2026/27 (£1,000 in 2023/24). Tax-free regardless of band.
Rate depends on where the dividend falls in your income stack:
- 8.75% in the basic-rate band (up to £50,270 total)
- 33.75% in the higher-rate band (£50,270 – £125,140)
- 39.35% in the additional-rate band (above £125,140)

Typical scenarios

Limited-company director taking £12,570 salary + dividends: salary uses all the PA, so dividends are taxed from £500 upwards (allowance only).
Employee investing on the side: salary uses the PA, dividends stack above. For higher-rate taxpayers, every extra £1 of dividend costs 33.75p.
Retired on pensions + dividends: pensions use the PA, dividends follow the same rules.

What we don’t cover

Dividend income from overseas (may be subject to double-taxation treaties).
Scrip dividends and dividend reinvestment plans (DRIPs) — usually taxed the same as cash dividends but worth checking the scheme documents.
Dividends received as part of a broader corporate restructuring.

See our methodology for sources and testing approach.

Frequently asked questions

What is the dividend allowance in 2026/27?: £500. It was £1,000 in 2023/24 and halved to £500 from April 2024; unchanged for 2026/27. Dividends within the allowance are tax-free regardless of your other income.
What rate of tax do I pay on dividends?: Dividends above the allowance are taxed based on the income-tax band they fall into: 8.75% (basic), 33.75% (higher), 39.35% (additional). These are UK-wide — Scotland does not set its own dividend rates.
How do dividends interact with my salary?: Your non-dividend income (salary, self-employed profit, etc.) is stacked first and uses Personal Allowance. Dividends sit on top, so the band that applies depends on your total income.
Are dividends from ISAs or pensions taxed?: No — dividends received inside an ISA or pension wrapper are entirely tax-free. This calculator is for unwrapped dividends from company shares held in your own name (e.g. limited-company director's distributions).
Does this cover Scottish taxpayers?: Yes — but note that dividend tax rates and bands are set UK-wide, not by Holyrood. Scottish income-tax bands only apply to non-dividend income.