Updated to fiscal year 2026-27
UK Dividend Tax Calculator
Enter your other income and the dividends you received to see your dividend tax, the tax-free allowance used, and how much of your dividends you keep.
- Net kept (89.8%)
- Dividend tax (10.2%)
Dividend tax takes about 10.2% of your dividends.
| Dividends received | £10,000 |
|---|---|
| Tax-free allowance used | −£500 |
| Taxable dividends | £9,500 |
| Basic Rate | |
| £9,500 at 10.75% | −£1,021 |
| Dividend tax | −£1,021 |
| Net dividends kept | £8,979 |
Information
Dividends are payments a company makes to its shareholders out of profits it has already paid Corporation Tax on. They are taxed separately from earned income, at their own set of rates, and carry a tax-free dividend allowance on top of your personal allowance.
How are dividends taxed on top of other income? Dividends are treated as the top slice of your income. Your salary, pension, rental, and savings income are stacked first; your dividends sit on top. Whichever income tax band the dividends land in (basic, higher, or additional) sets the dividend rate that applies. So the more other income you have, the more of your dividends are pushed into the higher-rate dividend band.
What is the dividend allowance? The first slice of dividends each year is tax-free. That dividend allowance was £2,000 up to 2022/23, cut to £1,000 for 2023/24, then cut again to £500 from 2024/25. Dividends within the allowance pay no tax, but they still use up your basic-rate band, so a large allowance-covered slice can push later dividends into a higher band.
Do dividends pay National Insurance? No. Dividends are not earnings, so no National Insurance is due on them. This is the main reason company directors often take a small salary plus dividends rather than a large salary: the dividends escape both employee and employer NI, though they still pay dividend tax and the company pays Corporation Tax on the profits first.
Are Scottish dividend rates different? No. Scotland sets its own bands and rates for earned income, but dividends are taxed at the UK-wide dividend rates everywhere in the UK. There is no separate Scottish dividend rate, which is why this calculator has no Scotland option.
What's not in this calculator? This page handles the headline dividend tax calculation on dividends you have already received. It does not model the Corporation Tax the company paid first, income tax or NI on any accompanying salary, or how a director should split pay between salary and dividends; those interact with the wider picture and are best simulated alongside the rest of your finances in the full planner, which can import your current inputs as a starting scenario.
FAQ
- How are dividends taxed on top of my other income?
Dividends are treated as the top slice of your income. Your salary, pension, rental, and savings income are stacked first; your dividends sit on top of them. Whichever tax band the dividends land in (basic, higher, or additional) sets the dividend rate that applies. So the more other income you have, the more of your dividends are pushed into the higher-rate dividend band.
- What is the dividend allowance?
The dividend allowance is a slice of dividends you can receive tax-free each year, on top of your personal allowance. It was £2,000 up to 2022/23, cut to £1,000 for 2023/24, then cut again to £500 from 2024/25. Dividends within the allowance still use up your basic-rate band, so a large allowance-covered slice can push later income into a higher band.
- Do dividends pay National Insurance?
No. Dividends are not earnings, so no National Insurance is due on them. This is the main reason company directors often take a small salary plus dividends rather than a large salary: the dividends escape both employee and employer NI, though they still pay dividend tax and the company pays Corporation Tax on the profits first.
- Are Scottish dividend tax rates different?
No. Scotland sets its own rates and bands for earned income, but dividends are taxed at the UK-wide dividend rates everywhere in the UK. There is no separate Scottish dividend rate, which is why this calculator has no Scotland option.
Recent changes
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The Autumn Budget 2025 raised the basic and higher dividend rates by 2 percentage points each, to 10.75% and 35.75%. The additional rate was left unchanged at 39.35%. The £500 dividend allowance was also left unchanged.
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The dividend allowance was halved from £1,000 to £500, the second cut in two years. Combined with the earlier cut, the tax-free slice fell to a quarter of its 2022/23 level, pulling many small shareholders and company directors into paying dividend tax for the first time.
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The dividend allowance was halved from £2,000 to £1,000. Dividend rates were unchanged at 8.75% / 33.75% / 39.35%, the levels set in April 2022 when a 1.25 percentage-point health and social care uplift was added across every band.
Sources
- Tax on dividends (HMRC)
- Income Tax rates and Personal Allowances (HMRC)
Disclaimer
Not financial advice. Figures are computed from the legislative tables published by HMRC and assume the dividends are received personally, outside an ISA or pension, and that your other income is taxed under the standard rules. Consult a qualified adviser for personal financial decisions.
