Dividend Tax Calculator
Dividend tax rose on 6 April 2026: the basic rate is now 10.75% and the higher rate 35.75% (up 2p each), with the tax-free allowance still £500. Enter your income to see your bill — and what the rise costs you.
Your income this year
How dividend tax works in 2026/27
Dividends stack on top of your other income. The first £500 is covered by the dividend allowance; the rest is taxed at 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% above £125,140. The 2p rises to the basic and higher rates took effect on 6 April 2026, announced at the 2025 Budget — and from April 2027 the same 2p goes on savings and property income too. See the dividend tax glossary entry for the full background.
No National Insurance is due on dividends, which is why small-company directors often take a low salary plus dividends — the rise narrows that gap. For your overall position, try the take-home pay calculator.
Frequently asked questions
What are the dividend tax rates for 2026/27?
10.75% basic, 35.75% higher and 39.35% additional rate, after the £500 allowance. The basic and higher rates each rose 2 percentage points on 6 April 2026.
How much dividend income is tax-free?
£500 a year, unchanged for 2026/27. Dividends inside an ISA or pension are always tax-free and don't count towards the allowance.
When did dividend tax go up?
6 April 2026 — basic rate 8.75% → 10.75%, higher rate 33.75% → 35.75%. The additional rate (39.35%) and £500 allowance were unchanged.
Do I pay National Insurance on dividends?
No. Dividends are NI-free — a key reason directors pay themselves with salary plus dividends. Compare with the National Insurance calculator.
How can I reduce dividend tax?
Hold shares inside an ISA (all dividends tax-free), use a pension, share holdings with a spouse to use both £500 allowances and basic-rate bands, or time dividends across tax years. Get regulated advice for anything more involved.