Dividend Tax Calculator
Calculate how much tax you owe on dividend income for the 2026/27 tax year, including the £500 dividend allowance.
Calculate how much tax you owe on dividend income for the 2026/27 tax year, including the £500 dividend allowance.
| Band | Income Range | Dividend Rate |
|---|---|---|
| Allowance | First £500 | 0% |
| Basic Rate Band | Up to £50,270 total income | 8.75% |
| Higher Rate Band | £50,271 – £125,140 | 33.75% |
| Additional Rate | Over £125,140 | 39.35% |
Dividends are taxed after your other income. The £500 allowance is within your tax band, not an allowance on top of your personal allowance.
📌 Rates sourced from Tax on dividends — verified for the 2026/27 tax year.
The first £500 of dividend income is covered by the dividend allowance (tax-free). Above that: dividends in the basic rate band are taxed at 8.75%; dividends in the higher rate band (£50,271–£125,140) at 33.75%; and dividends in the additional rate band (above £125,140) at 39.35%.
The dividend allowance for 2026/27 is £500. This means the first £500 of dividend income you receive is tax-free, regardless of your tax band. This was reduced from £1,000 in April 2024.
If your total dividend income exceeds the £500 allowance, you must report it via Self Assessment. If you do not normally file a Self Assessment return, you can report dividends under £10,000 by contacting HMRC to adjust your tax code.
Yes — many limited company directors take a small salary (up to the National Insurance threshold) and top up their income with dividends, which are taxed at lower rates than employment income. However, dividends can only be paid from post-tax company profits, and you should take professional advice on the optimal salary/dividend mix.