Mortgages & Money2 min check

Dividend Tax Calculator (2026/27)

Estimate the tax due on UK dividends after the £500 dividend allowance, taking your other income into account.

Short answer

The first £500 of dividends is tax-free. Above that, dividends are taxed at 10.75% (basic), 35.75% (higher) and 39.35% (additional) in 2026/27 — slotted on top of your other income.

Step 1 of 10%

Calculation method, coverage and version

Inputs used: Salary / other non-dividend income, Dividend income.
Calculation approach: The calculator applies the rules and assumptions described in “How it works” to the values you enter. Rounding can cause small differences from an official or provider calculation.
Coverage: Mortgages & Money. UK nations, tax treatment, local rules and provider criteria can differ; check the official sources shown below before acting.
Content version: No page-specific review date is currently published. Treat the result as indicative and verify current rules independently.

Not included unless explicitly requested: personal circumstances not entered, provider discretion, future rule changes, professional fees and case-specific exceptions. Read the full calculator methodology.

Primary sources and official verification

Use these official sources to verify current rules before acting. Coverage and dates can differ across England, Scotland, Wales and Northern Ireland.

See the sitewide source policy.

How it works

Dividends are taxed differently from salary: no NI, lower rates, and a £500 allowance on top of your normal personal allowance. Dividends are stacked on top of your other income, so they get taxed at the rate that corresponds to where they sit in your overall income.

Worked example

Director takes £12,570 salary + £40,000 dividends.

Salary uses all of personal allowance → no Income Tax on salary
£500 dividend allowance → tax-free
£37,200 taxed at 10.75% basic rate = £3,999
£2,300 taxed at 35.75% higher rate = £822
Total dividend tax: about £4,821

Who should use this

•Limited company directors taking dividends
•Investors with shares outside ISAs
•Anyone paid in part with dividends (e.g. equity)
•Spouses receiving distributed shares

Common mistakes

×Assuming dividends are tax-free below £2,000 (the allowance dropped to £500 in 2024/25)
×Forgetting dividends count toward the £100k allowance taper
×Not telling HMRC if you receive over £10,000 in dividends
×Confusing the dividend allowance with the personal savings allowance

Frequently asked questions

What is the dividend allowance for 2026/27?▾

£500 — down from £1,000 in 2023/24 and £2,000 before that.

Do dividends pay National Insurance?▾

No. That's a key reason directors take part of their pay as dividends rather than salary.

How are ISA dividends taxed?▾

They aren't — dividends inside a Stocks & Shares ISA are completely tax-free and don't need declaring.

When do I declare dividends?▾

Always on a Self Assessment return if dividends exceed £10,000, or if HMRC asks. Below that, ask HMRC to adjust your tax code.

What's the optimal director salary?▾

Often £12,570 (full personal allowance, qualifies for State Pension via NI credits if over the LEL) plus dividends — but it depends on circumstances.

Are foreign dividends taxed the same?▾

Generally yes for UK residents, but you may also pay foreign withholding tax. Double Tax Treaties usually let you reclaim some.

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Income Tax Calculator →Director Salary Calculator →Sole Trader vs Ltd →IR35 Calculator →Capital Gains Tax →Take-Home Pay →