Tax year 2026/27 · rates checked against the Finance Act 2026
Dividend Tax Calculator
Dividend tax rose on 6 April 2026. Enter your salary and dividends to see exactly what you owe under the new rates, band by band, next to what the same money cost last year.
Account of dividend tax due
Wages, self-employment, pension, rent: everything except dividends.
Dividends outside an ISA or pension for the year.
- Dividend allowance at 0%£500.00 · £0.00
- Basic rate · £4,770.00 at 10.75%£512.78
- Higher rate · £14,730.00 at 35.75%£5,265.98
Dividend tax due 2026/27£5,778.75
Effective rate on your dividends: 28.89%.
That is £390.00 more than the same figures in 2025/26, because the basic and higher dividend rates rose 2 percentage points on 6 April 2026.
The 2026/27 rates, next to last year’s
| Band | 2026/27 | 2025/26 | Change |
|---|---|---|---|
| Dividend allowance | £500 at 0% | £500 at 0% | No change |
| Basic rate (income to £50,270) | 10.75% | 8.75% | +2.00pp |
| Higher rate (to £125,140) | 35.75% | 33.75% | +2.00pp |
| Additional rate (above £125,140) | 39.35% | 39.35% | No change |
Band thresholds are total income for England, Wales and Northern Ireland. Scotland sets its own bands for salary, but dividend rates and the bands applied to dividends are UK-wide.
What changed on 6 April 2026
The Finance Act 2026 put 2 percentage points on the two lower dividend rates. Basic rate taxpayers now pay 10.75% instead of 8.75%. Higher rate taxpayers pay 35.75% instead of 33.75%. The additional rate was left alone at 39.35%, and the allowance stayed at £500.
In cash terms: a basic rate taxpayer with £10,000 of dividends pays £1,021.25 this year against £831.25 last year, £190 more. A higher rate taxpayer with £30,000 of dividends pays £590 more. The change hits steady dividend income of any size, not only large portfolios.
Dividends held inside an ISA or a pension are untouched. They were tax free before the rise and they are tax free after it.
How dividends stack on top of salary
Dividends are taxed as the top slice of your income. Your salary and other income fill the tax bands from the bottom; dividends sit above them and take whatever rate applies at that height. One worked example, using the calculator’s starting figures:
£45,000 salary + £20,000 dividends, 2026/27
- Personal allowance against salary£12,570
- Salary taxed first, filling the basic band£32,430
- Dividend allowance at 0%£500 · £0.00
- £4,770 in the basic band at 10.75%£512.78
- £14,730 in the higher band at 35.75%£5,265.98
- Dividend tax due£5,778.75
Only £5,270 of basic band room was left after salary, so most of the dividends landed in the higher band. A £5,000 pension contribution or a lower salary would pull thousands of that back down to 10.75%.
The shrinking dividend allowance
The tax-free dividend allowance has been cut to a tenth of its original size since it was introduced:
- 2017/18£5,000
- 2018/19 to 2022/23£2,000
- 2023/24£1,000
- 2024/25 to 2026/27£500
In 2017/18 a £5,000 allowance kept most small shareholders out of dividend tax entirely. At £500, almost anyone holding income shares outside an ISA now owes something.
Common questions
What are the dividend tax rates for 2026/27?
For dividends above the £500 allowance: 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 went up by 2 percentage points on 6 April 2026 under the Finance Act 2026. These dividend rates apply across the whole UK, including Scotland.
How much dividend income is tax free?
The dividend allowance is £500 for 2026/27, so the first £500 of dividends is taxed at 0%. If your other income is below the £12,570 personal allowance, the unused part of that allowance covers dividends too. And dividends inside an ISA or a pension never count at all.
Do I pay National Insurance on dividends?
No. Dividends carry no National Insurance, employee or employer. That is a big part of why company directors often take a small salary plus dividends rather than a large salary.
How do I actually pay the tax on my dividends?
Through Self Assessment if your dividends are over £10,000 or you already file a return. Below that, you can ask HMRC to collect it through your tax code instead. Either way, dividends up to £500 need no action.
Are dividends from shares held in an ISA taxed?
No. Dividends earned inside a stocks and shares ISA are completely free of dividend tax, do not use up your £500 allowance, and do not go on a tax return. With the allowance this small, holding income shares in an ISA matters more than it used to.
Did the 39.35% additional rate change in April 2026?
No. The Finance Act 2026 raised only the basic rate (8.75% to 10.75%) and the higher rate (33.75% to 35.75%). The additional rate stayed at 39.35% and the allowance stayed at £500.
I live in Scotland. Do different rates apply to me?
Scottish income tax bands apply to your salary, but dividend rates and the bands used for dividends are set UK-wide. So this calculator’s dividend figures hold for Scotland; only the tax on the salary itself would differ.
Why does my salary change the tax on my dividends?
Dividends are taxed as the top slice of your income. Salary fills the bands first, so a bigger salary pushes more of your dividends into the higher or additional rate band. The same £10,000 of dividends can cost £1,021 or £3,738 depending on what sits underneath it.
Guides
Dividend tax rates 2026/27
The April rise explained, with one worked example per band.
Read the guide →
How much dividend is tax free?
The £500 allowance, the personal allowance overlap and when to tell HMRC.
Read the guide →
Pension salary sacrifice
How the pay cut works, what you save and the watch-outs.
Read the guide →
Taking money out as salary instead? Our salary sacrifice pension calculator shows how much tax and National Insurance a pension contribution saves on the salary side.