UK Dividend Tax Calculator 2026/27
Calculate UK dividend tax for 2026/27: the £500 allowance, then 10.75%, 35.75% or 39.35% depending on your income band.
See also: optimum director salary, LTD closure / MVL, sole trader vs Ltd, director loan + S455.
Take-home pay
£10,000
0.0% effective tax rate Income Tax plus employee National Insurance as a percentage of your gross salary. Excludes pension, student loan, and HICBC.
- Monthly
- £833
- Weekly
- £192
- Daily
- £38
- Hourly
- £5.13
| Gross dividends | £10,000 |
|---|---|
| Dividend tax | −£0 |
| Net dividend | £10,000 |
How UK dividend tax works in 2026/27
Dividends from shares held outside a pension or Individual Savings Account (ISA) are taxed at their own rates. Four moving parts:
- Personal Allowance £12,570 (frozen until April 2031). Used by your other income first; any unused amount covers dividends.
- Dividend allowance £500 in 2024/25, 2025/26 and 2026/27 (down from £1,000 in 2023/24 and £2,000 from 2018/19 to 2022/23). Dividends within it are taxed at 0%, but still count towards your bands (ITA 2007 s.13A).
- Rate depends on where the dividend falls in your income (full Personal Allowance assumed):
- 10.75% in the basic rate band (£12,571 to £50,270)
- 35.75% in the higher rate band (£50,271 to £125,140)
- 39.35% in the additional rate band (above £125,140)
- No National Insurance on dividends.
Where dividend tax sits in the income stack
Under ITA 2007 s.16, savings and dividend income are treated as the highest part of your income, so they are taxed after:
- Other income (salary, self-employed profit, rental income, pensions)
- Savings income (bank interest)
- Dividend income
Each type has its own rates, but the band thresholds are shared. If your salary is £45,000 and you take £20,000 of dividends, the first £5,270 of dividends sits in the basic rate band (the first £500 of it at 0%, the rest at 10.75%), and £14,730 sits in the higher rate band at 35.75%.
This stacking rule is why a pay rise that uses more of the basic rate band pushes dividends you take into the higher band, even though the dividends themselves have not changed.
Limited company director: a common 2026/27 split
For a director who is the only employee of their company, a common split is:
| Component | Amount | Notes |
|---|---|---|
| Director salary | £12,570 | Uses the Personal Allowance: no Income Tax or employee NI. Employer NI is 15% above the £5,000 Secondary Threshold: £1,135.50. A company whose only employee is its sole director cannot claim the Employment Allowance. |
| Dividends taxed at 0% | £500 | The dividend allowance. |
| Dividends at the basic rate | £37,200 | The rest of the £37,700 basic rate band, at 10.75%. |
| Dividend tax | £3,999 | On £37,700 of dividends. |
| Net personal income | £46,271 | Salary plus dividends, less dividend tax. |
| Corporation Tax cost | varies | The £37,700 of dividends comes from post-Corporation Tax profit: about £50,267 of profit at the 25% main rate, or £46,543 at the 19% small profits rate. |
Going above £50,270 takes dividends into the higher rate band at 35.75%: £3,575 of personal tax per £10,000 of extra dividend. Combined with Corporation Tax at 25%, each £1 of profit paid out as a higher rate dividend bears about 51.81% in total.
Worked scenarios at 4 income levels
Each assumes the director has no other income besides the salary shown.
Director on £12,570 salary + £8,000 dividends: The Personal Allowance covers the salary. The dividend allowance covers the first £500 of dividends; the rest is taxed at 10.75%. Tax £806, net dividend £7,194.
Director on £12,570 salary + £38,500 dividends: Total income is £51,070, above the £50,270 higher rate threshold. £500 is taxed at 0%, £37,200 at 10.75% and the last £800 at 35.75%. Tax £4,285. Dividends count towards adjusted net income for the High Income Child Benefit Charge, which starts at £60,000.
Director on £80,000 salary + £15,000 dividends: The salary already reaches the higher rate band. £500 of dividends at 0%, the rest at 35.75% (total income £95,000 is below the £100,000 point where the Personal Allowance starts to be withdrawn). Tax £5,184.
Director on £140,000 salary + £20,000 dividends: The Personal Allowance is fully withdrawn. £500 of dividends at 0%, the rest at 39.35%. Tax £7,673.
Dividend statements and timing
Under CTA 2010 s.1100 a shareholder can request a statement of a distribution’s amount and date; in practice most companies issue a dividend voucher with each payment.
A dividend is taxed in the tax year in which it is paid, meaning when it becomes due and payable (HMRC SAIM5040). Directors can vary or cancel an interim dividend before payment, so it is treated as paid only when actually paid: an interim dividend decided on 30 March 2027 but paid on 10 April 2027 falls in 2027/28. A final dividend becomes due on the payment date set in the shareholders’ resolution, or on the date it is declared if no payment date is set.
Foreign dividends
Dividends from non-UK companies are taxable in the UK if you are UK resident, at the same rates, and the £500 allowance covers UK and foreign dividends together. Many countries deduct tax at source. Foreign Tax Credit Relief can usually reduce the UK tax by the foreign tax, limited to the rate in the relevant tax treaty and to the UK tax on that income. Tax deducted above the treaty rate has to be reclaimed from the foreign tax authority.
Scrip dividends, DRIPs and stock dividends
Scrip / stock dividend (new shares instead of cash, by choice): treated as income under the stock dividend rules in ITTOIA 2005 Part 4 Chapter 5 (s.410 sets when it arises), generally at the cash equivalent. The same amount is the Capital Gains Tax (CGT) base cost of the new shares.
Dividend Reinvestment Plan (DRIP): a cash dividend used to buy more shares. Taxed as a cash dividend; the base cost of the new shares is the price paid.
Bonus / capitalisation issue (free shares with no cash option): generally not a dividend for tax purposes. The original cost is spread across the enlarged holding.
ISA and pension dividends
Dividends from shares held inside a Stocks & Shares ISA or a registered UK pension (SIPP, SSAS, workplace scheme) are not taxed and do not need to be declared.
AIM-listed shares held in an ISA are tax-free on dividends. AIM shares that qualify for Business Property Relief got 100% relief before April 2026; from 6 April 2026 the rate for AIM shares is 50%, making them less attractive for Inheritance Tax (IHT) planning.
The director loan trap - Section 455 CTA 2010
If a close company lends money to a participator (such as a director-shareholder) and the loan is still outstanding 9 months and 1 day after the end of the accounting period, the company must pay Section 455 tax at the dividend upper rate - 35.75% for loans made in 2026/27 (CTA 2010 s.455(2) and (3)).
The tax is repayable once the loan is repaid, but the cash-flow cost is real. If a director takes £30,000 “on account” expecting to vote a dividend later and the loan is not cleared in time, the company pays £10,725 of Section 455 tax. The director may also have a taxable benefit on a cheap or interest-free loan if the total owed exceeds £10,000 at any point in the year.
Scottish taxpayers
Scotland does not set dividend tax rates or bands. Scottish Income Tax rates and bands apply only to non-savings, non-dividend income such as wages and pensions. A Scottish taxpayer’s dividends are taxed at the UK dividend rates using the UK bands, which the dividend calculator applies for every region. So a Scottish taxpayer earning between the Scottish higher rate threshold and £50,270 can still have dividends taxed at 10.75% where they fall within the UK basic rate band.
What we don’t cover
- Stock options and RSU vesting tax (employment income, not dividend tax)
- Crypto rewards / staking rewards (HMRC treats non-trading rewards as miscellaneous income, not dividends) - see our UK crypto tax guide
- Trust dividend income - see gov.uk: Trusts and Income Tax
- The pre-2016 10% dividend tax credit (abolished from April 2016, when the dividend allowance was introduced)
See our methodology for sources and testing approach.
Frequently asked questions
How much UK tax do I pay on dividends in 2026/27?
10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. The first £500 of dividends each year is taxed at 0% (the dividend allowance). Dividends sit on top of your other income, so a salary that uses up the basic rate band takes your dividends straight to 35.75%.
Do I pay National Insurance on UK dividends?
No. Dividends are not subject to National Insurance of any class. This is one reason directors take a salary and dividend mix.
Is the dividend allowance £500 or £1,000 in 2026/27?
£500 in 2026/27 (also £500 in 2024/25 and 2025/26). It was £1,000 in 2023/24 and £2,000 from 2018/19 to 2022/23.
Are dividends in an ISA or Self-Invested Personal Pension (SIPP) taxed?
No. Dividends inside a Stocks & Shares ISA, Lifetime ISA, Junior ISA, SIPP, SSAS, workplace pension or other registered UK pension are not taxed and do not need to be reported.
Do I need to file a tax return for dividend income?
If you received more than £10,000 of dividends, you need to file a Self Assessment return. Below that, if you have tax to pay and do not already file a return, tell HMRC between 6 April and 5 October after the tax year, either by asking it to change your tax code or by calling the helpline. You do not need to tell HMRC if your dividends are within the dividend allowance (gov.uk).
How is dividend tax different for limited company directors?
Profits paid out as dividends bear Corporation Tax in the company and then dividend tax personally. Combined, at the 25% main rate a basic rate dividend bears about 33.06%, a higher rate dividend about 51.81% and an additional rate dividend about 54.51%; at the 19% small profits rate a basic rate dividend bears about 27.71%. A salary is deductible for Corporation Tax, which is why directors usually combine the two.
How does Scotland differ for dividend tax?
It does not. Scotland sets its own rates and bands for earned income only. Dividends of Scottish taxpayers are taxed at the UK rates using the UK bands.
Related calculators and guides
Foundational guides:
- UK Tax-Free Allowances 2026/27 - £500 dividend allowance in context with PSA, PA, MA
- Personal Allowance £12,570 - underlying band structure dividends stack on
- Higher-rate 40% guide - when dividend stacks push into the higher rate
- Scottish income tax bands - Scottish bands for earned income
Director / Limited company optimisation:
- Optimum director salary 2026/27 - salary and dividend split this year
- Sole Trader vs Limited Company - comparing the two structures
- Director pension strategies - SSAS + employer pension contributions as an alternative to dividends
- Director loan account guide - Director’s Loan Account (DLA) + S455 and dividend timing
- LTD company MVL closure 2026/27 - closing a company with retained profits: Business Asset Disposal Relief (BADR) vs final dividend
- Inside IR35 meaning - Chapter 8 vs Chapter 10 treatment for contractor directors
Threshold + cliff planning:
- £100k tax trap - Personal Allowance taper, which counts dividends
- HICBC Explained - the Child Benefit charge, which counts dividends
- Salary sacrifice pension 2026/27 - reducing salary to stay within bands
Reform context:
- BADR guide - the rate for qualifying business disposals
- SEIS / EIS investor deep-dive - Enterprise Investment Scheme (EIS) investments
- Family Investment Companies (FIC) - FIC dividend structures
- Corporation Tax rates guide - Corporation Tax before dividends
- Crypto tax UK guide - crypto rewards vs dividend treatment
Compliance:
- PAYE + RTI new employer guide - PAYE if you pay yourself a salary alongside dividends
- Tax investigation guide - HMRC enquiries
- HMRC COP9 + CDF disclosure - if undeclared income exists
- Class 2 + Class 4 NI - dividends are not in the self-employed NI calculation
- UK CGT rules guide - for the CGT side of share sales.
Browse dividend tax by dividend amount
Pre-calculated UK dividend tax for 2 popular dividend levels in 2026/27. 10.75% / 35.75% / 39.35% rates, assuming no other income, including the £500 dividend allowance.
Related calculators
Other UK tax calculators that pair with the Dividend.
Frequently asked questions
What is the dividend allowance in 2026/27?
£500. It was £1,000 in 2023/24 and has been £500 since April 2024. Dividends within the allowance are taxed at 0% whatever your other income, although they still count towards your tax bands.
What rate of tax do I pay on dividends?
Dividends above the allowance are taxed according to the band they fall into: 10.75% (basic), 35.75% (higher) or 39.35% (additional) for 2026/27. The basic and higher rates rose by 2 percentage points from 6 April 2026. These rates and the UK bands apply to dividends of Scottish taxpayers too.
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 Individual Savings Account (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. Dividend tax rates and bands are set UK-wide, not by the Scottish Parliament. Scottish Income Tax rates and bands apply only to non-savings, non-dividend income such as wages, so a Scottish taxpayer's dividends are taxed using the UK bands.
What is the optimal director salary + dividend split in 2026/27?
A common approach is a £12,570 salary (no Income Tax or employee NI; employer NI of £1,135.50 unless the Employment Allowance applies) plus £37,700 of dividends, which takes total income to the top of the basic rate band. The first £500 of dividends is taxed at 0% and the rest at 10.75%: £3,999 of dividend tax, leaving £46,271 after personal tax, before Corporation Tax at company level. Use the salary vs dividend calculator for your own profit.
Do I pay National Insurance on dividends?
No. Dividends are not earnings for NI purposes. This is a main reason limited company directors take dividends: they carry dividend tax (10.75% / 35.75% / 39.35%) but no NI, whereas salary carries Income Tax plus employee NI (8% / 2%) and employer NI (15%). Dividends are paid from profits after Corporation Tax, while salary is deductible.
When is a dividend taxed - declaration date or payment date?
A dividend is taxed when it is paid, which for tax purposes means when it becomes due and payable. An interim dividend can be varied or cancelled before payment, so it is treated as paid when actually paid: an interim dividend decided on 30 March 2027 but paid on 10 April 2027 falls in 2027/28. A final dividend becomes due on the payment date set in the resolution, or on the date it is declared if no date is set (HMRC SAIM5040).
How are foreign dividends taxed?
UK residents pay the same UK dividend rates on foreign dividends, and the £500 allowance covers UK and foreign dividends together. Many countries deduct tax at source. Foreign Tax Credit Relief can usually reduce the UK tax by the foreign tax, limited to the rate in the relevant tax treaty and to the UK tax on that income; tax deducted above the treaty rate has to be reclaimed from the foreign tax authority.
What is the Section 455 director loan trap?
If a close company lends to a participator (such as a director-shareholder) and the loan is still outstanding 9 months and 1 day after the end of the accounting period, the company pays Section 455 tax at the dividend upper rate - 35.75% for loans made in 2026/27. It is repayable once the loan is repaid, but the cash-flow cost is real. Example: a £30,000 loan left outstanding means £10,725 of Section 455 tax.