UK Dividend Tax Guide 2026/27
Free dividend tax calculator for UK limited company directors and investors · Last updated June 2026 · Not financial or tax advice
GetDividend is a free browser-based calculator for UK dividend tax. It covers dividend tax for investors, the salary and dividend split strategy for limited company directors, and estimates corporation tax on company profit. No account or sign-up required — all calculations run in your browser.
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2026/27 dividend tax rates
| Band | Total income | Dividend rate |
|---|
| Dividend allowance | First £500 of dividends | 0% |
| Basic rate | Up to £50,270 total income | 10.75% |
| Higher rate | £50,271 – £125,140 | 35.75% |
| Additional rate | Over £125,140 | 39.35% |
Dividend tax rates increased from 6 April 2026 — the basic rate rose from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. The additional rate is unchanged at 39.35%. The dividend allowance remains at £500.
How dividend tax is calculated
HMRC stacks income in a specific order when calculating which band your dividends fall into. Salary (and other non-savings income) is counted first, then dividend income is placed on top. This means a director earning £40,000 salary who also takes £20,000 in dividends has a total income of £60,000 — pushing the dividends into the higher rate band, even though the dividends alone would fall in the basic rate band.
The calculation works as follows:
- Apply the Personal Allowance (£12,570) to salary first
- Any unused Personal Allowance reduces taxable dividends
- Apply the £500 dividend allowance — first £500 of dividends taxed at 0%
- Remaining dividends taxed at 10.75%, 35.75% or 39.35% depending on band
Optimal director salary for 2026/27
Most limited company directors without the Employment Allowance take a salary of £9,100 — just below the secondary (employer) National Insurance threshold. This means neither they nor their company pays NI on the salary, yet the salary counts toward their State Pension record. The remaining income is taken as dividends.
Directors who can claim the Employment Allowance (£10,500) often increase their salary to £12,570 to use their full Personal Allowance. The Employment Allowance offsets the employer NI, making this tax-neutral for the company. The Director optimiser mode models both strategies and compares take-home pay.
Note: sole directors with no other employees on the payroll cannot claim the Employment Allowance from April 2020.
Corporation tax 2026/27
Before directors can pay dividends, the company must pay corporation tax on its profits. The main rates for the financial year beginning 1 April 2026 are:
- 19% — small profits rate (profits up to £50,000)
- 25% — main rate (profits over £250,000)
- Marginal relief applies between £50,000 and £250,000
GetDividend's Director optimiser estimates corporation tax based on your company profit input, deducts it to find available profit, then shows how much of that profit is available as dividends after salary has been paid.
National Insurance on dividends
Dividends are not subject to National Insurance contributions — neither employee Class 1 NI nor employer NI. This is one of the primary reasons the salary and dividend combination remains tax-efficient for limited company directors compared to taking a higher salary alone.
Scottish taxpayers
Scottish taxpayers pay income tax on their salary at Scottish rates, which differ from the rest of the UK. However, dividend tax rates are set by the UK government and apply equally across all four nations. GetDividend applies Scottish income tax rates to salary for Scottish taxpayers, while dividend tax is always calculated at UK rates.
Important disclaimer
GetDividend is provided as a free guidance tool only. Figures are estimates and may not reflect your actual tax liability. UK tax rules are complex and subject to change. This is not financial or tax advice. Before making decisions about your remuneration structure, consult a qualified accountant or tax adviser. For official guidance visit
GOV.UK — Tax on dividends.
Also from the Get Suite
GetDividend is part of a suite of free UK business and finance tools. Use GetPayslip to estimate the PAYE and NI on your director salary. Use GetInvoice to generate HMRC-compliant PDF invoices, GetVAT for VAT calculations, GetMileage for HMRC mileage allowance, GetStudentLoan for student loan projections, and GetTimesheet for timesheet generation.