What are UK dividend tax rates for 2026/27?

After the £500 dividend allowance, dividends are taxed at 10.75% (basic rate band), 35.75% (higher rate) and 39.35% (additional rate) per HMRC's 2026/27 figures. The bands are based on your combined salary + dividend income.

Why is the dividend allowance only £500?

It was £2,000 until 2023/24, then halved to £1,000 in 2023/24, then halved again to £500 from 2024/25. The reduction has caused many shareholders and directors to pay dividend tax for the first time.

Do I pay National Insurance on dividends?

No. Dividends are not subject to employee or employer NIC, which is the main reason director shareholders take a low salary plus dividends rather than a high salary.

What is the optimum salary for a director taking dividends?

It depends, but commonly around the personal allowance (£12,570). That's above the NIC primary threshold to maintain a state pension qualifying year, while keeping employer NIC manageable. Use the Director Mix calculator to test salary, corporation tax, employer/employee NIC and dividend tax together, minimising dividend tax in isolation gives a misleading answer.

Dividend Tax Calculator UK 2026/27

Net dividend

£35,179

£40,000 gross − £4,821 tax · effective 12.1% on dividends

2026/27 rates · Last checked May 2026 · Sources in page details

Where it goes

Total tax £4,821

Combined income £52,570

Salary

£12,570

Net dividend

£35,179

Dividend tax

£4,821

Dividend tax bands

Dividends stack on top of your salary for band purposes.

£0£40,000

Dividend tax £4,821

Director salary planning

For the right director split, dividend tax alone doesn't tell the full story, corporation tax (salary is a deductible expense), employer NIC, employee NIC and the personal allowance all interact. Use the joint optimiser:

Open the Director Mix calculator

Dividend rates 2026/27

Basic

10.75%

Up to £50,270 combined

Higher

35.75%

£50,270 to £125,140

Additional

39.35%

Above £125,140

Where your tax goes

on £4,821 dividend tax

This is an estimate. The government does not set aside your exact tax for these areas.

21%

£1,027

Welfare

≈ 15 weeks of welfare per citizen

21%

£1,008

Health

≈ 103 days of NHS care (per citizen)

12%

£574

State Pensions

≈ 2 weeks of state pension

11%

£521

National Debt Interest

10%

£497

Education

≈ 13 school days funded

£265

Defence

See the full UK budget →

+ £936 across public order & safety, transport, business & industry and 6 more

Estimates onlyShow

Calculations use HMRC published rates for education and illustration. They are not regulated financial, tax, or legal advice. Verify against your own tax position before filing or making financial decisions.