UK Dividend Tax Calculator
2026/27 rates: £500 allowance, then 8.75% (basic), 33.75% (higher), 39.35% (additional) on dividends. Stack on top of other income.
Updated May 2026, using HMRC 2026/27 rates and current ONS / gov.uk figures.
Dividend tax bands track income tax bands but at different rates — designed to discourage company directors from paying themselves entirely in dividends to avoid NI. Rates 2026/27:
| Band | Rate on dividends |
|---|---|
| Allowance (first £500) | 0% |
| Basic rate slice | 8.75% |
| Higher rate slice | 33.75% |
| Additional rate slice | 39.35% |
Dividends sit on top of other income for band-allocation purposes.
How it works. £500 allowance covers first slice at 0%. Dividends stack on top of other income; basic/higher/additional rate slices apply at 8.75/33.75/39.35%. 2026/27.
Worked examples
£8,000 dividends + £12,570 salary: tax £656 (£500 allowance, then £7,500 at 8.75%).
£20,000 dividends + £40,000 salary: tax £4,719 (some basic, mostly higher rate dividends).
£40,000 dividends + £50,270 salary: tax ~£13,266 (mostly higher and some additional).
Sources:
HMRC dividend tax · HMRC Income Tax rates 2026/27
· retrieved 2026-05-12.
Frequently asked questions
How is the £500 allowance applied?
It covers the first £500 of dividend income at 0%, even for additional-rate payers. Below that, no dividend tax. Above, the rate depends on which band the dividends fall into.
Are dividends from ISAs taxable?
No. Dividends inside a Stocks & Shares ISA are tax-free regardless of amount.
How do I report dividend income?
Through self-assessment if it exceeds £10,000, or even the £500 allowance for some taxpayers. Speak to a qualified accountant or tax adviser for your specific situation.