Dividend tax calculator
Enter your other income and dividend amount to see exactly how much dividend tax you owe in 2026/27, split by band.
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Last updated 6 April 2026
How dividend tax is calculated in 2026/27
Dividends are taxed differently from salary and self-employed profit. They are first stacked on top of your other income, so the rate you pay depends on your total income — not just the dividend amount.
Every taxpayer receives a £500 dividend allowance in 2026/27 (reduced from £1,000 in 2023/24). Above that allowance, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate). No National Insurance is charged on dividends.
The key rule: other income (salary, pension, self-employed profit) fills the tax bands first. Dividends sit on top. So if your salary is £40,000, your dividends start in the basic rate band at £40,000 — only £10,270 more can fall in the basic band before hitting the 33.75% higher rate.
Worked example: £40k salary + £10k dividends
Salary: £40,000 — fills basic rate band from £12,570 to £40,000. Basic rate band remaining: £50,270 − £40,000 = £10,270.
Dividends: £10,000. Allowance: £500. Taxable dividends: £9,500. All within basic rate band (£10,270 remaining). Dividend tax: £9,500 × 8.75% = £831.25.
Effective dividend tax rate: £831.25 ÷ £10,000 = 8.3%. This is why limited company directors prefer dividends over salary where possible.
Dividends and Self Assessment
Dividend income above £500 must be declared on a Self Assessment return. If you have not filed before, register by 5 October after the tax year. The online filing deadline is 31 January.
Your employer or financial institution does not collect dividend tax via PAYE — you pay it yourself through Self Assessment, usually in January and potentially via payments on account.
Frequently asked questions
Do I pay National Insurance on dividends?
No. Dividends are not subject to National Insurance — either employee or employer. This is one of the main reasons limited company directors pay themselves partly via dividends.
What is the dividend allowance in 2026/27?
The tax-free dividend allowance is £500 in 2026/27. This applies in addition to your Personal Allowance, which covers all types of income including dividends.
Are dividends from ISAs taxable?
No. Dividends and growth within a Stocks and Shares ISA are completely tax-free, with no reporting requirement. Dividends outside an ISA, above the £500 allowance, are taxable.
How do I pay dividend tax?
Declare dividends on your Self Assessment return. HMRC calculates the tax due and you pay it by 31 January (plus payments on account if applicable). You cannot pay dividend tax via PAYE.
Related guides
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.