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.

Tax on £15,000 Dividends UK 2026/27

Gross dividends: £15,000. After dividend tax you keep £14,793 — assuming no other taxable income (add salary below to stack).

Take-home pay

£14,793

1.4% effective tax rate

Monthly: £1,233
Weekly: £284
Daily: £57
Hourly: £7.59

Gross dividends	£15,000
Dividend tax	−£207
Net dividend	£14,793

Band breakdown

Band	Amount	Rate	Tax
Allowance	£500	0.00%	£0
Basic rate	£1,930	10.75%	£207

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Your salary in context

ONS · HMRC · CPI

Net dividend

After UK dividend tax you keep £14,793 from the £15,000 gross — an effective rate of 1.4%.
Dividend allowance

£500 of your dividends fall within the £500 tax-free dividend allowance.
Standalone dividend

With no other income, Personal Allowance (£12,570) absorbs the first chunk of your dividend before the allowance and bands apply.
Taxed at Basic rate

£1930 of dividends at 10.75% = £207.
Tax-free via ISA

Dividends held inside a Stocks & Shares ISA are entirely free of UK dividend tax. 2026/27 annual allowance: £20,000.

Nearby salaries

£10,000

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.