Dividend Tax Calculator 2026/27

Dividends sit on top of your other income. The first £500 is tax-free, then rates are 10.75%, 35.75% and 39.35%.

Updated 2026-10-03 · 2026/27 HMRC rates

Dividend tax£3,17110.6% of dividends · rates 10.75% / 35.75% / 39.35% · £500 allowance

Tax on salary	£0
Dividend allowance used	£500
Dividend tax	£3,171
Total income tax	£3,171

Your result is ready

Key facts

The personal allowance stays at £12,570 in 2026/27 and is reduced by £1 for every £2 of adjusted net income over £100,000, so it is gone entirely at £125,140 (HMRC income tax rates and allowances).
In England, Wales and Northern Ireland, 2026/27 income tax is 20% on the first £37,700 of taxable income, 40% up to £125,140 and 45% above that (HMRC rates and thresholds for employers 2026 to 2027).
Scotland has six bands in 2026/27: 19% starter on the first £3,967 of taxable income, 20% basic to £16,956, 21% intermediate to £31,092, 42% higher to £62,430, 45% advanced to £125,140 and 48% top above that (HMRC rates and thresholds for employers 2026 to 2027).
Budget 2025 extended the freeze on income tax thresholds and the equivalent employee and self-employed National Insurance thresholds for a further three years, from April 2028 to April 2031 (HM Treasury Budget 2025).
Employees pay Class 1 National Insurance at 8% on earnings between £12,570 and £50,270 a year and 2% above that in 2026/27 (HMRC rates and thresholds for employers 2026 to 2027).
Employers pay 15% National Insurance on earnings above the £5,000 secondary threshold, and eligible employers can claim an Employment Allowance of £10,500 (HMRC rates and thresholds for employers 2026 to 2027).
Self-employed people pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above that; voluntary Class 2 costs £3.65 a week if profits are below £7,105 (GOV.UK self-employed National Insurance rates).
Dividend tax rose by 2 percentage points from April 2026: the basic rate is now 10.75% and the higher rate 35.75%, while the additional rate stays at 39.35% and the dividend allowance stays at £500 (GOV.UK tax on dividends).

Dividend tax explained

How dividends are taxed: the stacking order

Dividend tax depends on your other income because dividends are treated as the top slice of your income. HMRC taxes salary, pension, self-employment and rental income first, then savings interest, then dividends, so the dividends fall into whichever band is left.

The £500 dividend allowance is not an exemption that shrinks your income: it taxes the first £500 at 0%, but those dividends still use up part of your basic or higher rate band. That is why a large dividend can push salary-free income into the 35.75% band sooner than people expect.

Dividends use UK-wide bands even for Scottish taxpayers. A director in Edinburgh pays the same 10.75% / 35.75% / 39.35% rates as one in Bristol, though the Scottish rates still apply to their salary.

Worked examples

Salary of £12,570 plus £20,000 of dividends: the salary uses the Personal Allowance, £500 of dividends is taxed at 0%, and the remaining £19,500 is taxed at 10.75%, a bill of £2,096.25.

Income already at the higher rate threshold of £50,270 plus £10,000 of dividends: after the allowance the balance is all at 35.75%, giving £3,396.25.

A £30,000 employee with a £5,000 share portfolio payout outside an ISA owes £483.75 – all at the basic dividend rate after the allowance.

Other income	Dividends	Dividend tax	Effective rate on dividends
£12,570	£20,000	£2,096	10.5%
£30,000	£5,000	£484	9.7%
£50,270	£10,000	£3,396	34.0%
£80,000	£30,000	£10,546	35.2%
£150,000	£50,000	£19,478	39.0%

How and when to pay

You only need to report dividends if they exceed your unused Personal Allowance plus the dividend allowance. If you already file a Self Assessment return, include them there by the 31 January deadline.

If you do not file a return and your dividends are £10,000 or less, tell HMRC between the end of the tax year and 5 October; it can collect the tax through your tax code. Over £10,000, you must register for Self Assessment.

Ways to keep dividend tax down

A limited company can only pay dividends from accumulated profits after corporation tax. Paying more than that is unlawful, and money taken without enough reserves is usually treated as a director’s loan instead.

Hold shares and funds in a stocks and shares ISA, where dividends are tax-free and do not use your allowance.
Spouses and civil partners can each use their own £500 allowance and basic rate band by holding shares in their own names.
Company directors should time dividends across tax years, so that income does not cross £50,270 or the £100,000 point where the Personal Allowance starts to be withdrawn.
Personal pension contributions extend your basic rate band, which can bring higher-rate dividends back into the basic dividend rate.

Two situations where dividend tax catches people out

A director paying themselves £12,570 salary and £40,000 of dividends pays £4,821.25 of dividend tax. Because the salary uses the Personal Allowance, the first £500 of dividends is at 0% and the rest falls in the basic band, with only a small slice crossing into the higher band.

An employee earning £60,000 who receives £50,000 of dividends in one year – for example a one-off distribution from a family company – has total income of £110,000. That reduces the Personal Allowance by £1 for every £2 over £100,000, and the dividends themselves are taxed at 35.75%, giving £17,696.25 of dividend tax before the extra tax on the salary from the lost allowance.

In both cases, the dividend was declared and paid in a single tax year. Splitting a large payment either side of 5 April, or paying some into a pension, can change the outcome by thousands of pounds.

Records to keep

HMRC can ask for these records if it reviews your return. Keep them for at least as long as you keep your Self Assessment records.

A dividend voucher for each payment, showing the company, date, shareholder and amount.
Board minutes approving the dividend and confirming there were enough distributable profits.
Annual statements from platforms and fund managers showing dividends outside ISAs.

Frequently asked questions

Did dividend tax go up in 2026?

Yes. From 6 April 2026 the basic and higher dividend rates rose by 2 percentage points; the additional rate is unchanged.

Is the dividend allowance per person or per company?

Per person. You get one £500 allowance a year, however many companies or funds pay you dividends.

Do Scottish taxpayers pay different dividend tax?

No. Dividend rates and bands are UK-wide; Scottish income tax rates apply only to non-savings, non-dividend income such as wages.

Are dividends from funds in a pension taxed?

No tax is paid on dividends received inside a registered pension. Tax applies when you draw income from the pension.

Do I pay National Insurance on dividends?

No. Dividends carry no employee, employer or Class 4 National Insurance, which is a main reason directors take them instead of salary.

Are accumulation fund dividends taxable?

Yes. Dividends reinvested automatically in accumulation units are taxed as if you had received them, unless the fund is held in an ISA or pension.

Sources

Figures are taken from official government publications and were last reviewed on 2026-10-03.