Dividend tax calculator
Dividends are taxed at 10.75%, 35.75% or 39.35% depending on which band they fall in, after a £500 dividend allowance. They are treated as the top slice of your income, so your salary decides how much falls into the higher rate. No National Insurance is due, but the company has already paid corporation tax on the profit.
Two things decide the number and neither is the amount of the dividend: which band it lands in, and what your salary has already used up.
Dividend tax calculator
Personal tax only. The company has already paid corporation tax on the profit these dividends come from. Estimate only.
Why the salary changes the answer
Dividends sit on top of everything else. Your salary, rent and any other income fill the bands first, and the dividends take whatever room is left.
The same £20,000 of dividends, two directors:
| Salary | Tax on £20,000 of dividends | Why |
|---|---|---|
| £12,570 | £2,096 | All within the basic-rate band |
| £50,270 | £6,971 | The salary used the whole basic band; every dividend is at higher rate |
Three and a third times the tax on the same dividend. This is the arithmetic behind the small-salary convention — though salary is deductible for the company and dividends are not, which is why the answer is a calculation rather than a rule. See how to pay yourself for both sides together.
The allowance does not do what people expect
The £500 is taxed at 0%, but it still occupies room in the band it falls in. It does not shift the rest of your dividends into a lower band — it exempts itself and nothing more.
See both halves of the bill
The dividend tax is only your side of it. Send us the company's profit and what you need to draw, and we will show the total cost — corporation tax and personal tax together — for salary, dividends and pension contributions.
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Free assessment first. If there is work to do, you get a fixed quote in writing before anything starts.
What this does not include
- Corporation tax — the company paid it before the dividend existed. Between £50,000 and £250,000 that is at a 26.5% marginal rate.
- Student loan repayments, which some plans charge on dividend income.
- The High Income Child Benefit Charge, where total income crosses £60,000.
- Dividends from shares held outside your company — same rates, same allowance, one pot.
And it assumes the dividends were lawful: paid out of distributable profit, with a board minute and a voucher. Money taken without those is a director's loan, taxed under entirely different rules.
Questions people ask
What are the dividend tax rates for 2026/27?
10.75% at basic rate, 35.75% at higher rate and 39.35% at additional rate, after a £500 dividend allowance. The basic and higher rates each rose by two points this year — any calculation built on the old figures now understates the tax.
Does the dividend allowance reduce my other tax?
No, and this catches people. The £500 is taxed at 0% but still uses up room in whichever band it falls in. It does not push the rest of your dividends down into a lower band — it just goes untaxed itself.
Is corporation tax included?
No. This is your personal tax. The company has already paid corporation tax on the profit the dividend comes from — see the corporation tax calculator for that half. Looking at either in isolation understates the total cost of taking money out.
Why does my salary change the dividend tax?
Because dividends are treated as the top slice of your income. Salary fills the basic-rate band first, so the more you take as salary, the more of your dividends are pushed into the higher rate.
Do I pay National Insurance on dividends?
No. That is the main reason directors take them — but they are paid from profit the company has already been taxed on, so the saving is smaller than it looks when you only count one side.
When do I pay it?
Through Self Assessment, by 31 January after the end of the tax year — and possibly with a payment on account on top. See paying your Self Assessment bill, because the January figure is often larger than people budget for.
Figures are for the tax year shown and change every April. They are general information, not advice — we check the current position for your circumstances before anything is filed.
Reviewed 19 October 2026.
Part of our work on company and director tax — if you want someone to take it off your hands, start with our how to pay yourself from a limited company page.