Dividend tax calculator
What you pay on your dividends, stacked on top of your salary and taxed at the band they land in. 2026/27 rates.
| Slice | Rate | Amount | Tax |
|---|
More options
Dividend tax is the same across the UK, so there is no region to set: it is not devolved. Only your salary changes the answer, by deciding which band your dividends land in.
How dividend tax works
Dividends are the top slice of your income. Your salary and other earnings fill the tax bands from the bottom, and your dividends sit on top of them. The rate you pay on a dividend depends on the band it reaches, so the same dividend costs more the higher your salary.
The first £500 of dividends each year is tax-free. Above that, the rates for 2026/27 are:
| Band | Dividend rate |
|---|---|
| Basic rate | 10.75% |
| Higher rate | 35.75% |
| Additional rate | 39.35% |
The basic and higher rates both rose 2 points for 2026/27, from 8.75% and 33.75%. The additional rate held at 39.35%.
The £500 allowance is a band, not a discount
Dividends inside the allowance are taxed at 0%, but they still use up part of your basic-rate band. So the allowance can quietly push the rest of your dividends up into the next band. It does not come off the top of your bill.
No National Insurance
Dividends carry income tax only. That is why company directors often take part of their income as dividends, though the rate rises since 2022 have narrowed the gap against salary.
Questions
How is dividend tax worked out?
Your dividends are stacked on top of your other income and taxed at the dividend rate for whichever band they land in. The first £500 each year is tax-free. Above that, basic-rate taxpayers pay 10.75%, higher-rate 35.75% and additional-rate 39.35%.
Why does my salary change my dividend tax?
Because dividends are the top slice of your income. Your salary fills the tax bands first, then dividends sit on top. The same £10,000 of dividends is taxed at 10.75% for someone on a £20,000 salary and 35.75% for someone on £60,000, purely because of where it lands.
Did dividend tax go up for 2026/27?
Yes. The basic rate rose from 8.75% to 10.75% and the higher rate from 33.75% to 35.75% from 6 April 2026. The additional rate stayed at 39.35%. The £500 dividend allowance is unchanged.
Is the £500 dividend allowance really tax-free?
The first £500 of dividends is taxed at 0%, but it still uses up part of your basic-rate band. So it does not simply come off the top: it can push your other dividends into a higher band. It is a nil-rate band rather than a true exemption.
Do dividends count for National Insurance?
No. Dividends carry income tax only, no National Insurance. This is why taking income as dividends rather than salary can be cheaper for company directors, though the gap narrowed when the dividend rates rose.
Is dividend tax different in Scotland?
No. Dividend tax is not devolved, so Scottish taxpayers pay the same UK rates and use the same UK band thresholds for dividends, even though their salary is taxed on the Scottish bands. A Scottish taxpayer in the Scottish higher band can still pay basic-rate tax on their dividends.
Provenance
How this is worked out
Rates and the allowance come from gov.uk, checked on 16 July 2026. Dividends are taxed on top of your other income using the UK band thresholds, which apply to dividends everywhere in the UK including Scotland. See the methodology for how the figures are sourced and tested.
Work out your salary take-home to see the whole picture. If you are a company director choosing how to pay yourself, run the same money through the self-employed calculator as well: dividends avoid National Insurance entirely, which is the whole reason the question comes up.