Dividend Tax Calculator 2026/27 (UK)

How It Works

Dividend tax is not a separate tax — it is Income Tax charged at special rates on dividend income. The calculation runs in a fixed order. First, your Personal Allowance (£12,570) is used against your other income (salary, profits, pension); any allowance left over covers your dividends, so dividends that fall inside an unused Personal Allowance are tax-free. Next, the dividend allowance covers the first £500 of your remaining dividends at 0%. Then the rest of your dividends are taxed at the rate for the band they fall in — and because dividends sit on top of your other income, the band depends on how much of it your salary has already used up.

One detail catches people out: the £500 dividend allowance is a nil-rate band, not a deduction. The first £500 of dividends is charged at 0%, but it still uses up £500 of whichever band it falls in — so if your other income leaves exactly £500 of basic-rate band spare, every pound after the allowance is taxed at 35.75%.

The 2026/27 rates, published on GOV.UK for 6 April 2026 to 5 April 2027, are:

The basic and higher rates each rose by two points on 6 April 2026, after the November 2025 Budget; the additional rate and the £500 allowance did not change. Many older calculators still show the old 8.75% and 33.75% figures — if another calculator gives you a lower bill, check which year’s rates it uses. The Personal Allowance (£12,570) and the band thresholds (£50,270 and £125,140) are frozen for 2026/27.

The table below shows the tax on £10,000 of dividends at different levels of other income, so you can see how the stacking works:

The same £10,000 of dividends costs anywhere from nothing to £3,738.25 depending on what else you earn — which is why a dividend calculator that asks only for your dividends cannot give you the right answer.

Worked Example

Take a basic-rate taxpayer with £30,000 of salary and £5,000 of dividends from shares held outside an ISA. The Personal Allowance of £12,570 is used up by the salary, leaving taxable salary of £17,430. The £500 dividend allowance covers the first £500 of dividends at 0% (using up £500 of basic-rate band), and the remaining £4,500 sits inside the basic-rate band, taxed at 10.75%: £4,500 × 10.75% = £483.75 of dividend tax. The effective rate on the dividends is 9.7%, and £4,516.25 of the £5,000 is kept.

Now take a higher-rate taxpayer with £60,000 of salary and £10,000 of dividends. The salary uses £47,430 of taxable income, so after the £500 allowance the remaining £9,500 of dividends all falls in the higher-rate band: £9,500 × 35.75% = £3,396.25 of dividend tax. The effective rate on the dividends is 34.0%. If those same shares had been held inside a Stocks and Shares ISA, the tax would have been £0 — the strongest reason most UK investors hold dividend-paying shares inside an ISA first.

Assumptions

• 2026/27 rates (6 April 2026 – 5 April 2027): £500 dividend allowance; 10.75% basic, 35.75% higher, 39.35% additional.
• Standard Personal Allowance of £12,570, tapering by £1 for every £2 of total income above £100,000 and reaching zero at £125,140. The taper is applied in the band calculation.
• Dividends are the top slice. Other income uses the Personal Allowance and the lower bands first; dividends stack on top. The £500 allowance occupies band space at 0%.
• UK-wide rates. Dividend tax is not devolved, so the same rates apply in Scotland even though Scottish income tax bands differ.
• Not included: Corporation Tax on company profits, pension contributions, Gift Aid, the marriage allowance, savings income, and the extra tax on your other income if dividends push your total income over £100,000 and shrink your Personal Allowance. No National Insurance is due on dividends.

Sources: GOV.UK — Tax on dividends (rates for 6 April 2026 to 5 April 2027); GOV.UK — Income Tax rates and allowances. Last reviewed: 13 November 2026.

How to Use This Calculator

Enter your total dividend income for the year — dividends from shares, funds and your own company, outside any ISA or pension. Dividends inside a Stocks and Shares ISA are entirely tax-free and should not be entered at all. Then enter your other income: salary, self-employed profits, pension income and anything else taxable that is not dividends. The calculator applies the Personal Allowance to your other income first, then the £500 dividend allowance, then splits the remaining dividends across the basic, higher and additional bands.

The headline result is the dividend tax you owe for 2026/27. The table underneath shows how much of your dividends fell in each band and the tax on each slice, plus the tax-free amounts, the amount of dividends you keep, your effective rate on dividends and your marginal dividend rate — the rate on the next pound of dividends, which is what matters if you are deciding whether to take more income as dividends. Results update as you type, so try your other income just below and just above £50,270 to see the rate jump from 10.75% to 35.75%.

Tips and Practical Advice

Use your ISA allowance first. You can put up to £20,000 a year into ISAs, and dividends on shares held inside a Stocks and Shares ISA are completely free of dividend tax — they do not even count towards your £500 allowance. For a higher-rate taxpayer with £10,000 of dividends a year, moving the holdings into an ISA saves £3,396.25 a year. Selling outside the ISA and buying back inside (“bed and ISA”) counts as a disposal for Capital Gains Tax, so check your gains position first.

Watch the £50,270 boundary. Dividends crossing into the higher-rate band are taxed at 35.75% instead of 10.75% — more than three times as much. If you are a company director choosing between salary and dividends, the cheapest combination usually keeps total income inside the basic-rate band. Pension contributions help too: they reduce your total income for band purposes, pulling dividends back into the basic-rate band.

Remember the April 2026 rise. The basic and higher dividend rates went up by two points this year, so a higher-rate taxpayer with £10,000 of dividends pays £190 a year more than last year for doing nothing differently. If your dividend income has grown — or if you are comparing this year’s bill with last year’s — the rate rise, not a mistake, is the likely explanation.

Finally, remember that nobody deducts dividend tax for you. If your dividends are over £10,000 you must report them through Self Assessment; up to £10,000 of dividend tax can be collected through your tax code if you ask HMRC. Keep your dividend vouchers and statements so the figures on your return match what your broker or company reports.

Frequently Asked Questions