Dividend Tax Calculator UK
Estimate your dividend tax for 2026/27 based on salary and dividend income — ideal for limited company directors and contractors.
Based on published UK 2026/27 dividend tax rates and allowances
Use this dividend tax calculator UK to estimate your dividend tax 2026/27 liability. Enter your salary and dividend income below — ideal for limited company directors who pay themselves via a combination of salary and dividends.
📈 Your Income
to see your estimated dividend tax
How UK Dividend Tax Works in 2026/27
Dividend income is taxed separately from salary, but the two interact: your salary uses up your Personal Allowance and basic rate band first, then dividends are taxed on top using whatever band space remains.
Dividend Allowance and tax rates
The first £500 of dividend income is tax-free (the Dividend Allowance) regardless of your other income. Above this, dividends are taxed at 8.75% within the basic rate band, 33.75% within the higher rate band, and 39.35% within the additional rate band.
Salary plus dividends strategy
Many limited company directors take a small salary (often around the Personal Allowance or NI threshold) plus dividends for the remainder of their income. This avoids National Insurance on the dividend portion while still using the Personal Allowance efficiently, and benefits from lower dividend tax rates compared to additional salary.
National Insurance and dividends
Dividends are never subject to National Insurance, unlike salary. This is the main reason the salary-plus-dividends approach can be more tax-efficient than taking all income as salary, though it should be considered alongside pension contributions and corporation tax implications.
Dividend Tax Calculator — FAQs
Dividend income is taxed after your salary and other income, using your remaining basic rate, higher rate and additional rate bands. The first £500 of dividend income is tax-free (the Dividend Allowance), with the remainder taxed at 8.75% (basic rate), 33.75% (higher rate) or 39.35% (additional rate) for 2026/27.
The Dividend Allowance for 2026/27 is £500. This means the first £500 of dividend income you receive each tax year is tax-free, regardless of your other income or tax band.
No. Dividends are not subject to National Insurance, which is one reason many limited company directors pay themselves a small salary plus dividends — the salary uses up the NI-free Personal Allowance while dividends avoid NI entirely.
If your total income (salary plus dividends) puts you in the higher rate band, dividend income above your basic rate band and Dividend Allowance is taxed at 33.75% for 2026/27. Dividends are treated as the top slice of your income for tax band purposes.
Often, yes, when combined with a modest salary. A common strategy is taking a salary up to the Personal Allowance or NI threshold, then drawing further income as dividends to benefit from lower dividend tax rates and no National Insurance. However, this depends on your specific circumstances and should ideally be discussed with an accountant.
Dividends use up any remaining Personal Allowance first if you have other income like salary. Once your Personal Allowance and Dividend Allowance are used, further dividend income is taxed at the relevant dividend tax rate based on your total income tax band.
Calculations are estimates based on current UK dividend tax rates and should be used for guidance only. Read our Disclaimer, Privacy Policy and Terms of Use for more information.