Work out the tax on your dividends for 2026/27 — after the £500 allowance, at 10.75%, 35.75% and 39.35%. This UK dividend tax calculator also finds the best salary and dividend split for a company director and shows the £100,000 personal-allowance trap.
Built & maintained by Marcus, freelancer·Figures from HMRC·Last updated July 2026
Updated for 2026/27: Dividend tax rose by 2 percentage points from 6 April 2026 — the ordinary rate went from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. The additional rate stays at 39.35% and the tax-free dividend allowance stays at £500. Switch the year selector to 2025/26 to see the difference.
£500
Tax-free dividend allowance
10.75%
Ordinary (basic) rate
35.75%
Upper (higher) rate
39.35%
Additional rate
£/ yr
£/ yr
Dividend tax to pay 2026/27
£—
— effective rate on dividends · £— left after dividend tax
How your dividends are taxed
Covered by unused personal allowance dividends inside your £12,570 tax-free allowance£0
£500 dividend allowance taxed at 0%£0
Ordinary rate 10.75% on £0 of dividends£0
Upper rate 35.75% on £0 of dividends£0
Additional rate 39.35% on £0 of dividends£0
Total dividend tax£0
Personal-allowance trap: your total income is over £100,000, so your £12,570 personal allowance is being tapered away (£1 lost for every £2 over £100k). That pushes the effective tax on dividends in this band well above 35.75% — see the £100k Trap tab.
Scotland: dividend tax is not devolved — Scottish taxpayers pay these same UK rates and thresholds on dividends. Only your salary and other earned income is taxed at Scottish rates. This calculator shows dividend tax only; for income tax and NI on your salary use the UK self-employed tax calculator.
£/ yr
Net take-home from salary + dividends
£—
— / month · — effective tax on company profit
Director salary tax-free, no income tax
—
Employer NI on salary 15% above £5,000
—
Corporation tax 19% to £50k, 26.5% marginal
—
Dividends drawn post-corporation-tax profit
—
Dividend tax at 10.75% / 35.75%
—
—total tax on your company profit
—
effective rate
—
you keep
Deciding whether to be a limited company at all? Compare both routes in the sole trader vs limited company calculator. This tab assumes you already trade through a company and draw a small salary plus dividends. Employee National Insurance is £0 on salaries at or below £12,570.
£/ yr
£—
dividends you can take tax-free
£—
before you hit the upper rate
£—
before the £100k trap
The £100,000 trap: once your total income passes £100,000 you lose £1 of personal allowance for every £2 of income, until it's gone at £125,140. In that band each pound of dividend is taxed at 35.75% and claws back tax-free allowance — pushing your real marginal rate on dividends to around 58%, nearly as harsh as the famous 60% trap on salary.
Dividends drawn
Total income
Total tax
Marginal rate
Total tax = income tax on your salary (England, Wales & N. Ireland rates) plus dividend tax; marginal rate = the tax on the last £1,000 of dividends at each level. Rows highlighted in orange sit above the £100,000 personal-allowance taper. Assumes the allowance is only reduced by your income (no gift aid or pension relief adjustments). Scottish salary rates differ slightly — dividends themselves are UK-wide.
How dividend tax works in 2026/27
Dividends are the last slice of your income. HMRC first covers your salary and other earnings with your £12,570 personal allowance, then stacks your dividends on top and taxes them at the dividend rates. The first £500 of dividends is always tax-free under the dividend allowance, and any personal allowance you haven't used with a salary shelters more on top of that.
Above those allowances, the rate depends on which income band your dividends fall into. While your total income stays within the basic-rate band — up to £50,270 — dividends are taxed at the ordinary rate of 10.75%. Between £50,270 and £125,140 they hit the upper rate of 35.75%, and above £125,140 the additional rate of 39.35%. This dividend tax calculator applies each band automatically, so to work out how much dividend tax you will pay you just enter your salary and your dividends.
Worked example: a director takes a £12,570 salary and £40,000 of dividends. The £12,570 salary uses the personal allowance, the first £500 of dividends is tax-free, the next £37,200 is taxed at 10.75% and the final £2,300 at 35.75% — a dividend tax bill of about £4,821 for 2026/27, an effective rate of 12.1% on the dividends.
The 2026/27 dividend tax rise, explained
From 6 April 2026 the two lower dividend rates each went up by 2 percentage points: the ordinary rate rose from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%. The additional rate stayed at 39.35% and the tax-free dividend allowance stayed at £500. Switch the year selector to 2025/26 in any tab to see the difference — on £40,000 of dividends the rise adds around £790 a year.
The increase matters most to company directors who pay themselves mainly in dividends, because it narrows the long-standing gap between drawing dividends and taking a salary. Combined with employer National Insurance at 15% on salary above £5,000 and corporation tax rising to a 26.5% marginal rate, it has become well worth checking whether an incorporated structure still pays — our sole trader vs limited company calculator does exactly that.
How much can you take in dividends tax-free?
Two allowances stack. The £500 dividend allowance is available to everyone, and any unused personal allowance shelters dividends at 0% as well. If dividends are your only income you can draw up to £13,070 completely tax-free — £12,570 of personal allowance plus the £500 dividend allowance. If you already take a £12,570 salary, only the £500 is left, so £500 of dividends is tax-free and the rest is taxed.
After that, the question most directors ask is how much they can draw before the higher rate bites. On a £12,570 salary you have roughly £37,700 of headroom in the ordinary 10.75% band before your total income reaches £50,270 and dividends start being taxed at 35.75%. The Headroom & £100k Trap tab works this out for your salary and shows the dividend tax at each level.
The best salary and dividend split for a director
For most limited company directors the tax-efficient strategy is a small salary plus dividends. A salary of £12,570 uses your full personal allowance with no income tax and no employee National Insurance, while keeping you within the National Insurance record for your state pension. The company pays employer NI at 15% on the part of the salary above £5,000, deducts the salary and NI as a cost, pays corporation tax on what's left, and you draw the remaining profit as dividends.
The Salary & Dividend Split tab is a salary and dividend calculator that runs this full waterfall — salary, employer NI, corporation tax, dividends and dividend tax — so you can see your real take-home and effective tax rate on your company profit. If you're weighing salary against dividends inside an IR35 contract, check the IR35 calculator; for your income tax and Class 4 NI as a sole trader, use the UK self-employed tax calculator.
The £100,000 dividend trap
Once your total income passes £100,000, HMRC removes £1 of your personal allowance for every £2 of income, until it disappears completely at £125,140. That clawback pulls previously tax-free income into tax and shrinks your basic-rate band at the same time, so each extra pound of dividend in this band carries a real marginal rate of around 58% — almost as steep as the well-known 60% trap on salary.
If your income is heading into this zone, two common moves keep you out of it: drawing dividends only up to £100,000 and leaving the rest in the company for a later year, or making a personal pension contribution, which reduces the income that counts towards the taper. Our pension tax relief calculator shows how much a contribution claws back.
Dividends and Scotland
Dividend tax is a reserved, UK-wide tax — it is not devolved to Scotland. A Scottish taxpayer pays exactly the same dividend rates (10.75%, 35.75% and 39.35%) and uses the same £50,270 and £125,140 thresholds as someone in England, Wales or Northern Ireland. Only your salary and other earned income is taxed at the separate Scottish rates. That is why this dividend tax calculator is the same for the whole UK and does not ask which nation you live in — for the income tax on your salary, use a Scottish-aware tool such as the UK self-employed tax calculator.
Frequently Asked Questions
How much dividend tax will I pay in 2026/27?
It depends on your other income and how much you draw. After your £12,570 personal allowance and the £500 tax-free dividend allowance, dividends are taxed at 10.75% while your total income stays within the basic-rate band (up to £50,270), then 35.75% up to £125,140, and 39.35% above that. For example, a director on a £12,570 salary drawing £40,000 in dividends pays about £4,821 in dividend tax for 2026/27. Enter your own figures in the calculator to see your exact bill.
How much dividend income is tax-free?
Everyone gets a £500 tax-free dividend allowance in 2026/27, on top of any unused personal allowance. If your only income is dividends you can receive up to £13,070 tax-free — your £12,570 personal allowance plus the £500 dividend allowance. If you already use your personal allowance with a salary, only the £500 dividend allowance is left.
What are the 2026/27 dividend tax rates?
For 2026/27 the ordinary (basic) rate is 10.75%, the upper (higher) rate is 35.75% and the additional rate is 39.35%. The ordinary and upper rates each rose by 2 percentage points on 6 April 2026 — from 8.75% and 33.75%. The additional rate and the £500 dividend allowance were left unchanged.
How much can I take in dividends before paying higher-rate tax?
Higher-rate (upper) dividend tax starts once your total income passes £50,270. On a £12,570 salary that means about £37,700 of dividends stay in the ordinary 10.75% band, and anything above pushes into the 35.75% rate. Take a lower salary and the tax-free room grows, because any unused personal allowance also shelters dividends. The Headroom tab shows your figure.
Do Scottish taxpayers pay a different rate of dividend tax?
No. Dividend tax is not devolved, so Scottish taxpayers pay the same UK dividend rates (10.75% / 35.75% / 39.35%) and use the same £50,270 and £125,140 thresholds as the rest of the UK. Only your salary and other earned income is taxed at Scottish rates, which is why this calculator does not ask for your region.
What is the most tax-efficient salary and dividend split for a director?
For most limited company directors the best strategy is a salary of £12,570 — the full personal allowance, with no income tax and no employee National Insurance — with the rest drawn as dividends. Employer NI applies at 15% on salary above £5,000, and corporation tax (19% up to £50,000, 26.5% on the marginal band to £250,000) is paid before dividends. The Salary & Dividend Split tab shows your full take-home. Whether a company beats being a sole trader at all is a separate question — see our sole trader vs limited company calculator.
Why do dividends over £100,000 get taxed so heavily?
Once your total income passes £100,000 your £12,570 personal allowance is withdrawn by £1 for every £2 of income, disappearing entirely at £125,140. Because that clawback re-exposes income to tax and also shrinks your basic-rate band, the real marginal rate on dividends in the £100,000 to £125,140 band climbs to around 58% — nearly as punishing as the famous 60% trap on salary. Many directors cap their income at £100,000 or make a pension contribution to stay under it.
Sources & how we calculate
We stack your dividends on top of your other income and apply the 2026/27 dividend rates — 10.75% ordinary, 35.75% upper and 39.35% additional — above the £500 dividend allowance and any unused personal allowance. The personal allowance tapers by £1 for every £2 of income over £100,000, which lowers the higher-rate threshold and drives the £100k trap. The Salary & Dividend Split tab adds employer National Insurance at 15% above £5,000 and corporation tax (19%, with a 26.5% marginal rate to £250,000). Dividend rates and thresholds are UK-wide; everything runs in your browser from the figures you enter.
Estimate only, not tax advice. This tool covers dividend tax and a small-salary director split; it does not include student loans, the High Income Child Benefit Charge, or every personal circumstance. Confirm your position with a qualified accountant before acting.
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