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Dividend tax calculator
For limited company directors paying themselves a salary plus dividends: 2026/27 rates, the £500 allowance, and a band-by-band breakdown of what you keep.
Tax year 2026/27. Dividends sit on top of your salary, so the salary fills your personal allowance and tax bands first. The first £500 of taxable dividends is covered by the dividend allowance, taxed at 0% but still using up band space. rUK income tax bands; dividend rates are the same UK-wide.
You keep, after all tax and NI
£43,861
of £47,570 total income · 7.8% effective tax rate
- Dividend tax£3,709
- Income tax on salary£0
- Employee NI on salary£0
- Total deductions£3,709
Dividends, band by band
- Dividend allowance · £500 at 0%£0
- Basic rate · £34,500 at 10.75%£3,709
Comparing with sole trader profits? Self-employed tax calculator.
Common questions
- How are dividends taxed in 2026/27?
- Dividends sit on top of your other income, so your salary fills the personal allowance and tax bands first. The first £500 of taxable dividends is covered by the dividend allowance, then you pay 10.75% inside the basic rate band, 35.75% in the higher band and 39.35% in the additional band. On a £12,570 salary plus £35,000 of dividends, the salary is tax-free, the first £500 of dividends is tax-free, and the remaining £34,500 is taxed at 10.75%, which is £3,708.75.
- Did dividend tax go up in April 2026?
- Yes. The November 2025 Budget raised the basic rate from 8.75% to 10.75% and the higher rate from 33.75% to 35.75% from 6 April 2026. The additional rate stays at 39.35% and the £500 allowance is unchanged. For a director taking £35,000 of dividends on top of a £12,570 salary, that is about £690 more tax a year than under the old rates.
- What is the most tax-efficient salary and dividend split?
- A common starting point is a salary of £12,570, which matches the personal allowance, so it attracts no income tax and no employee National Insurance, and it still counts towards your state pension record. Profits above that are then taken as dividends. One wrinkle: the company itself owes employer NI at 15% on salary above £5,000, about £1,135.50 at a £12,570 salary, though that is deductible against corporation tax and some companies can offset it with the Employment Allowance (companies whose only paid employee is also a director cannot claim it). The right split depends on the company's profits and your other income; treat this as education, not advice.
- Do I pay National Insurance on dividends?
- No. Dividends are not earnings, so neither you nor the company pays NI on them. That is the main reason the salary-plus-dividends structure usually beats taking everything as salary: a £40,000 slice taken as salary above the NI threshold costs up to 8% employee NI, while the same slice taken as dividends costs none.
- When do I pay tax on dividends?
- Through Self Assessment, not payroll. Dividends received in the 2026/27 tax year go on the return due by 31 January 2028, which is also the payment deadline. If you are not already registered for Self Assessment, register by 5 October 2027. And if your bill is over £1,000, HMRC usually asks for payments on account towards the next year, so the first bill can feel like one and a half years of tax at once.
- Is this exact?
- It is accurate for a UK taxpayer with a standard tax code and no other income. Other income (rent, interest, another job), benefits in kind or Scottish rates on the salary part will change the picture. It is guidance, not regulated financial advice.
Working for yourself without a company? The self-employed tax calculator covers sole trader profits, and if you are weighing the company route against a salary, the take-home pay calculator shows what the same money looks like through PAYE.