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🇬🇧 UK-only · Updated for 2026/27 Tax Year

Dividend Tax Calculator 2026/27

The government raised dividend taxes in April 2026. See exactly how the new 10.75% and 35.75% rates impact your income as a contractor or investor.

✓New 2026/27 Rates✓£500 Allowance✓£100k PA Taper Logic✓Free — no sign-up

Income Details

Enter your gross PAYE salary, pension, or other non-dividend income.

Dividends sit on top of your other income for tax purposes.

Dividend Tax Owed (2026/27)

£0.00

Effective Tax Rate: 0.0%

Tax Breakdown:

Tax-Free (0%):£0.00
Total Dividend Tax:£0.00
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Dividend Tax Rates 2026/27 — What Changed in April 2026

In a major shift for contractors and company directors, the government increased dividend tax rates in April 2026. The new rates mean you will keep less of your company profits. The updated rates for the 2026/27 tax year are:

  • Basic rate: 10.75% (was 8.75%)
  • Higher rate: 35.75% (was 33.75%)
  • Additional rate: 39.35% (remains unchanged)

How Are Dividends Taxed in the UK?

Unlike regular salary, you do not pay National Insurance on dividend income. This makes dividends a highly tax-efficient way to extract money from a limited company, even after the April 2026 rate increases.

The £500 Dividend Allowance

Everyone gets a tax-free Dividend Allowance of £500. This means the first £500 of dividend income you earn each year is taxed at 0%. This allowance is available regardless of whether you are a basic, higher, or additional rate taxpayer.

How Dividends Stack on Top of Your Salary

For tax purposes, dividends are treated as the "top slice" of your income. Your salary, pension, and rental income use up your £12,570 Personal Allowance and your basic rate tax band first. Your dividends then sit on top of this. For example, if your salary uses up your entire basic rate band, all of your dividends (above the £500 allowance) will be pushed into the 35.75% higher rate bracket. You can model this using our Take-Home Pay Calculator.

How the April 2026 Rate Rise Affects Company Directors

Many company directors extract profits via a small salary and high dividends. The 2% hike across the basic and higher rates means you will need to pay hundreds (or thousands) of pounds more in tax this year. If you are operating via a limited company, you should also check whether your contracts fall inside or outside the IR35 rules using our IR35 Calculator.

Do I Need to Declare Dividends on Self Assessment?

If your total dividend income is strictly under the £500 allowance, you do not need to do anything. If it is over £10,000, you are legally required to register for Self Assessment and file a tax return. If your dividend tax bill triggers payments on account, you will need to pay half of next year's estimated bill in advance. You can forecast this using our Payment on Account Calculator.

Dividend Taxation

Frequently asked questions

What are the dividend tax rates in 2026/27?
In April 2026, the rates increased. The new dividend tax rates are: 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers.
How much has dividend tax gone up in April 2026?
Both the basic rate and higher rate of dividend tax increased by exactly 2 percentage points. The basic rate jumped from 8.75% to 10.75%, and the higher rate jumped from 33.75% to 35.75%.
What is the dividend allowance in 2026/27?
The dividend allowance remains at £500 for the 2026/27 tax year. This means the first £500 of dividend income you earn is completely tax-free, regardless of what tax band you fall into.
How do I calculate tax on my dividends alongside my salary?
Dividends sit on top of your other income. Your salary uses up your Personal Allowance and the lower tax bands first. Your dividends are then taxed at whatever bands remain available. Our calculator handles this 'stacking' logic automatically.
Do I need to report dividends in my Self Assessment?
If your total dividend income for the year is under the £500 allowance, you do not need to report it. If it is over £500, you must report it to HMRC. If it is under £10,000, you can usually ask HMRC to change your tax code. If it is over £10,000, you must file a Self Assessment tax return.
Is dividend income added to my salary for tax purposes?
Yes. Even though dividends have their own specific tax rates, they are added to your total income to determine which tax band you fall into, and to calculate if you lose your Personal Allowance (which tapers away once total income exceeds £100,000).
Can I use my personal allowance against dividend income?
Yes. If your salary and other non-dividend income does not fully use up your £12,570 Personal Allowance, the remaining allowance can be used against your dividend income to make it completely tax-free.
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