UK Dividend Tax Calculator 2026/27
Calculate UK dividend tax for 2026/27. See how much tax you owe on dividends above the annual dividend allowance at your marginal rate.
Last updated: May 2026
Employment income, self-employed profit, rental income, etc.
Dividends from UK and overseas shares (outside ISA)
Total Income
£40,000
Dividend Allowance Used
£500
Taxable Dividends
£14,500
Dividend Tax Owed
£1,269
Effective Dividend Rate
8.5%
Take-Home from Dividends
£13,731
2024/25 Dividend Tax Rates
Dividends within a Stocks & Shares ISA are completely tax-free and do not count towards your dividend allowance.
Reviewed by Dr. Arpit Verma
•Economic Researcher & PhD (Finance)Arpit oversees the macroeconomic data points, including inflation adjustments and global PPP indices, ensuring our cross-border calculators are backed by solid data. All mathematical models and regulatory data points have been verified for the current 2026 fiscal period.
How are dividends taxed in the UK?
UK dividends are taxed at lower rates than salary. Above the annual dividend allowance, you pay dividend tax at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate). Dividends do not attract National Insurance.
Limited company directors often pay themselves a combination of a small salary and dividends to minimise income tax and NI. This calculator helps you work out the dividend tax owed and the most tax-efficient split between salary and dividends.
How to use this calculator
- 1Enter your salary — Input any employment or salary income you receive.
- 2Enter dividend income — Add the total dividends you have received or plan to pay yourself.
- 3Review dividend tax — See the dividend allowance used, taxable dividends, and tax owed at each rate.
- 4Optimise salary/dividend split — Adjust the salary and dividend amounts to find the most tax-efficient combination.
Formula & example
Dividend Tax = (Dividends - Dividend Allowance) x Applicable Rate | Rate depends on which income tax band the dividends fall into
Example: Limited company director with salary 12,570 and dividends 40,000. Taxable dividends = dividends minus allowance. Tax calculated at 8.75% for basic rate band portion.
Benefits
Salary and dividend optimisation
Find the most tax-efficient split between salary and dividends for limited company directors.
All rate bands shown
See exactly which dividends fall into basic, higher, or additional rate bands.
2026/27 allowance
Uses the current dividend allowance for 2026/27.
No NI on dividends
Confirms dividends are not subject to National Insurance, unlike salary.
Use cases
Limited company directors
Calculate the most tax-efficient salary and dividend combination.
Investors with dividend portfolios
Estimate the tax owed on dividends from shares, investment trusts, or ETFs.
ISA vs general account
Compare the tax saving from holding dividend-paying investments inside an ISA.
Annual tax planning
Ensure dividend income stays within the basic rate band to minimise tax rate.
Frequently asked questions
What is the dividend allowance for 2026/27?+
The dividend allowance for 2026/27 is the amount of dividend income you can receive tax-free each year. Check gov.uk for the exact current figure as it can change each tax year.
Do I need to report dividends on Self Assessment?+
Yes, if your dividends exceed the annual dividend allowance you must report them on a Self Assessment return. If you only receive dividends from an ISA, they are tax-free and do not need to be reported.
Are dividends better than salary?+
For limited company directors, a combination of a small salary (up to the personal allowance or NI threshold) plus dividends is usually more tax-efficient than a pure salary, because dividends are not subject to NI and attract lower income tax rates.
What is the optimal salary for a limited company director in 2026/27?+
The optimal salary is typically the NI Secondary Threshold if the company has only one director, or the Primary Threshold if the company has two or more employees and can claim the Employment Allowance.
Do dividends count toward pension annual allowance?+
No. Dividends are not classed as earned income for pension purposes. Only earned income (salary, self-employed profits) counts toward the pension annual allowance and is used to calculate pension contribution limits.