UK Dividend Tax Calculator 2026/27
Estimate the tax on dividends alongside a salary for the 2026/27 tax year, using the dividend allowance and the increased dividend rates.
| Income tax on salary | — |
|---|---|
| Employee NI on salary | — |
| Dividend allowance used | — |
| Dividend tax @ 10.75% (basic band) | — |
| Dividend tax @ 35.75% (higher band) | — |
| Dividend tax @ 39.35% (additional band) | — |
| Net income after tax | — |
In short
In 2026/27 UK dividends above the £500 allowance 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, after salary and other income have used up the bands. Dividends carry no National Insurance.
Who this is for: UK company directors and shareholders estimating tax on a salary-plus-dividends package for 2026/27.
How dividends are taxed in 2026/27
Dividends are taxed after salary and other income, so they sit in whichever band your salary leaves you in. The first £500 is covered by the dividend allowance (it still uses up band space). Rates: 10.75% in the basic band, 35.75% in the higher band, 39.35% in the additional band — the first two rose by 2 points from April 2026.
Dividends carry no National Insurance, which is why a low salary plus dividends is usually cheaper than an all-salary package for a company director — though the company has already paid corporation tax on the profits distributed.
Assumptions
- Salary uses the bands first; dividends stack on top, with £500 tax-free.
- Dividend rates: 10.75% basic, 35.75% higher, 39.35% additional (2026/27, marked verify).
- Employee NI is calculated on salary only; employer NI and corporation tax are excluded.
Worked example
Salary within the personal allowance → £0 income tax, £0 NI. Dividends: £500 allowance, then £37,200 in the basic band at 10.75% = £3,999; remaining £2,300 at 35.75% = £822. Total ≈ £4,821.
Frequently asked questions
Should salary be £12,570 or lower?
£12,570 uses the full personal allowance with no employee NI, and secures a qualifying year for state pension. Employer NI applies above £5,000 — but is usually offset by the Employment Allowance if the company qualifies.
Are dividends taxed at source?
No — you report them on a Self Assessment return and pay by 31 January (with payments on account thereafter).
What about Scottish taxpayers?
Dividend rates are UK-wide, but the Scottish income tax bands change where your salary leaves you — this tool uses rUK bands.
How much tax on £50,000 in dividends?
With a £12,570 salary, roughly £6,190 in 2026/27: £500 tax-free, £37,200 at 10.75% and the remainder at 35.75%.
Is it still worth taking dividends instead of salary?
Usually yes for a director, because dividends avoid employee and employer NI; but corporation tax on the profits and the higher dividend rates from April 2026 narrow the gap.
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