Dividend tax calculator
Dividends above the £500 allowance are taxed at 10.75%, 35.75% or 39.35%, depending on the band the salary or pension already fills, under gov.uk's rules on tax on dividends for 2026/27. This calculator estimates the tax due, the band split, and what is kept from the dividends entered.
How are dividends taxed on top of income?
Dividends are the last slice of income to be taxed. A salary or pension uses the personal allowance first, under gov.uk's Income Tax rates and Personal Allowances, and fills the basic-rate band before dividends stack on top of that. The band the top slice reaches sets the rate. A modest salary with a large dividend can be cheap for this reason, while a salary already close to the higher-rate threshold makes the same dividend more expensive.
The £500 dividend allowance is taxed at 0%, but it is a zero-rate band, not a deduction. It still uses up space in whatever band it sits in, so it does not lift the threshold at which dividends move from the basic rate to the higher rate. Above the allowance, gov.uk's 2026/27 rates on dividends are 10.75%, 35.75% and 39.35%. The basic and higher rates rose by two percentage points from 6 April 2026, so an estimated bill on the same dividends is higher than in earlier years.
How much tax will I pay on my dividends?
On a £45,000 salary with £10,000 of dividends, the salary uses the personal allowance and most of the basic-rate band. The first £500 of dividends is tax-free under the allowance. The next slice fills what is left of the basic-rate band at 10.75%, and the rest crosses £50,270 and is taxed at 35.75%. The estimated total comes to £2,204, leaving an estimated £7,796 kept from the £10,000.
Common questions
How much can I earn in dividends before paying tax?
The dividend allowance is £500 for 2026/27. The first £500 of dividends is taxed at 0%, but it still counts towards your bands, so it can push later dividends into a higher rate.
What are the dividend tax rates for 2026/27?
Above the £500 allowance, dividends are taxed at 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band. The basic and higher rates each rose by two percentage points from 6 April 2026.
Why does my salary decide the tax rate on my dividends?
Dividends sit on top of your other income. Your salary or pension fills the tax-free allowance and the lower bands first, then the dividends stack on top. Whatever band that top slice reaches sets the rate, so the same dividend costs more once your salary is near the higher-rate threshold.
Do dividends count towards the £50,270 higher-rate threshold?
Yes. Dividends are part of your total income for working out which band you are in. A salary just below £50,270 plus dividends can tip the dividends over the line, taxing the part above at the higher dividend rate.
Do I pay National Insurance on dividends?
No. Dividends are not earnings, so there is no National Insurance on them. That is why company directors often take a small salary and the rest as dividends, though the gap has narrowed as dividend rates have risen.
How are dividends taxed on top of income?
A salary or pension fills the personal allowance and basic-rate band first, under gov.uk's Income Tax rates. Dividends stack on top of that as the last slice of income, so the band the top slice reaches sets the rate. The £500 allowance is taxed at 0% but still uses up band space. Above it, gov.uk's 2026/27 dividend rates of 10.75%, 35.75% and 39.35% apply depending on the band reached.
How much tax will I pay on my dividends?
The first £500 of dividends is tax-free under the allowance. Anything above is taxed at 10.75% while the total stays within the basic-rate band, and at 35.75% above that, under gov.uk's tax on dividends rules. Entering a salary and a dividend figure above gives an estimated tax bill and an estimate of what would be kept.
Sources & Rate Verification
Rates verified against official statutory guidance on 6 September 2026.