Dividend Tax Calculator
✓ Verified for 2026/27Your Income
£
£
Dividend Tax
£2,000
tax on dividends only
Net Dividends
£28,000
take-home from dividends
Total Take-Home
£40,570
salary + net dividends
Overall Tax Rate
4.7%
blended tax rate
Income Breakdown
Gross Salary
£12,570
Gross Dividends
£30,000
Income Tax (Salary)
£0
National Insurance
£0
Dividend Tax
£2,000
Net Take-Home Pay
£40,570
Net Pay
95%
Tax
5%
Dividends are paid out of company profits after Corporation Tax has been deducted. You do not pay National Insurance on dividend income, making it a tax-efficient way for directors to draw income from their companies.
How We Calculated This
- Input base salary and dividends: Enter director's salary and gross dividend distribution.
- Deduct Dividend Allowance: Subtract the £500 tax-free dividend allowance.
- Identify remaining tax bands: Assess where the taxable dividend falls within basic, higher, and additional rate bands.
- Apply dividend tax rates: Calculate tax at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate).
Real-World Examples
Example 1: Salary £12,570 and Dividends £30,000
A typical director tax setup using standard thresholds.
Director Salary: £12,570 (tax-free under personal allowance) Dividends: £30,000 - Dividend Allowance: £500 = Taxable Dividends: £29,500 All taxable dividends fall within the Basic Rate Band: Tax at 8.75% of £29,500: £2,581.25
Frequently Asked Questions
What is the dividend tax-free allowance for 2026/27?
The tax-free dividend allowance is £500. Dividends received up to this amount are completely free from tax, regardless of other income.
What are the dividend tax rates for 2026/27?
Dividends are taxed at 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers.
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About This Calculator
This calculator uses the latest HMRC rates for the 2026/27 tax year. For illustrative purposes only — always consult a qualified tax adviser for formal advice.