UK Dividend Tax Calculator 2026/27
Estimate the personal tax on a salary-plus-dividends profile common to limited company directors. UK rates for the 2026/27 tax year.
Dividends are taxed after your salary uses up the personal allowance. The dividend allowance is £500 for 2026/27. Dividend rates are 10.75% (basic), 35.75% (higher), 39.35% (additional). This example assumes no other taxable income and uses England/Wales/Northern Ireland income-tax bands; Scottish salary bands differ. Other income can use up bands and change the result, and this tool does not calculate National Insurance.
Excludes employee NI on salary (typically £0 at £12,570). Does not model student loan, child benefit clawback or pension contributions.
How dividend tax works for company directors
One possible arrangement is salary plus dividends, but it is not a universal recommendation and a director is not required to take salary. Dividends must be paid from distributable post-Corporation-Tax profits; the company has already paid 19–25% before the director sees a penny.
- Your salary uses up the personal allowance first.
- The first £500 of dividends is tax-free (the dividend allowance).
- Dividends above that are taxed at 10.75%, 35.75% or 39.35% depending on where they fall in the income tax bands.
- With the full Personal Allowance, the basic-rate band ends at £50,270 of total income. Above £100,000, the allowance tapers and the higher-rate slice widens; additional rate begins at total income of £125,140.
Compare salary scenarios; do not assume one is optimal
The £12,570 salary prefilled above is an example, not a recommendation. It can use the full Personal Allowance and sits at the employee NI Primary Threshold, but it is above the 2026/27 employer NI Secondary Threshold of £5,000; employer NI may therefore be due. A valid Employment Allowance can change the company cost, but a company with one director as its only employee above the Secondary Threshold cannot claim it. A salary near the Lower Earnings Limit (£6,708) may matter for a qualifying year, but the director’s full NI record and payroll circumstances need checking. Compare the company and personal tax together before changing salary or dividends.
This calculator is a sanity check, not tax advice. Dividend strategy interacts with Corporation Tax, pension contributions, student loans, child benefit, mortgage applications and personal cash flow. Speak to a UK chartered accountant before changing your salary or dividend pattern.
Frequently asked questions
After. The company pays Corporation Tax on profit, then declares dividends from post-tax retained profit.
Scottish bands apply to non-savings, non-dividend income (so your salary). Dividend tax rates and thresholds remain UK-wide.
No. Dividends are not subject to National Insurance, but they are paid from post-Corporation-Tax profits and may attract dividend tax. Salary can be deductible for Corporation Tax but may trigger employer and employee NIC. Compare the complete company and personal position rather than assuming one route is always more efficient.
The same dividend tax bands apply. It only affects this calculator if you change the dividend figure.
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Information on this page is general guidance for UK small businesses and is not financial, tax or legal advice. Tax rules, allowances and product terms change. Always check current information with HMRC, Companies House or a qualified professional before making decisions.