How it works
Apply unused Personal Allowance, then the £500 dividend allowance. Tax remaining dividends at 10.75%, 35.75% or 39.35% as they fall into the income bands.
A worked example
With £35,000 other income and £5,000 dividends, the dividend tax estimate is £483.75.
What to keep in mind
2026/27. Other income is assumed to be non-savings income. Dividends sit above it. The £500 allowance still uses tax-band space. Excludes savings income, pensions, reliefs and foreign tax credits. This result is dividend tax only.
Dividend tax rates for 2026/27
After the Personal Allowance and the £500 dividend allowance, dividends are taxed at 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band.
How dividends and salary combine
Dividends are treated as the top slice of your income, so your salary uses up the lower bands first. With a £35,000 salary and £5,000 of dividends, the first £500 is tax-free and the rest is taxed at 10.75%, giving £483.75.
Director salary and dividends
A common set-up for company directors is a salary around the Personal Allowance plus dividends. With a £12,570 salary and £10,000 of dividends, the estimated dividend tax is £1,021.25.
Higher-rate taxpayers
With £60,000 of other income and £5,000 of dividends, the dividends fall into the higher-rate band, so the estimated dividend tax is £1,608.75.
Frequently asked questions
How much tax do I pay on dividends?
It depends on your other income. In 2026/27, rates are 10.75%, 35.75% and 39.35% after the £500 dividend allowance.
Do I need to file a Self Assessment for dividends?
Usually, if your dividends are above £10,000 or you have tax to pay that is not collected through your tax code.
Is the dividend allowance extra Personal Allowance?
No. It is a zero-rate allowance, and those dividends still count towards income tax bands and the Personal Allowance taper.
Sources & rates
Rates checked on 7 October 2026.
For general information and planning, not personalised financial or tax advice. Verify important decisions with a qualified adviser.