Dividend tax calculator for company directors

Dividend tax rates for 2026/27

From 6 April 2026, dividends above your allowance 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. The first £500 of dividends each year is tax-free under the dividend allowance. All four figures are on gov.uk's Tax on dividends page.

Two of those rates went up this year. Budget 2025, on 26 November 2025, raised the basic (ordinary) rate from 8.75% to 10.75% and the higher (upper) rate from 33.75% to 35.75%. The additional rate stayed at 39.35%. HMRC's policy paper says the new rates apply to dividends paid on or after 6 April 2026, across the whole UK.

Plenty of calculators still show the old 8.75% and 33.75%. If the one you are using does not say 2026/27, it is probably out of date.

How dividends stack on your salary

Dividends are counted last. gov.uk's instruction is to add your total dividend income to your other income to find your band, and HMRC treats dividends as the top slice. Your salary fills the bands first, and your dividends sit on top of it. So the same dividend can be taxed at 10.75% for one director and 35.75% for another, depending on their pay.

The calculator follows those steps. It sets your £12,570 Personal Allowance against your salary first and passes any unused part to your dividends. It then lines your salary up in the bands, puts your dividends on top, and taxes the first £500 of dividends at 0%. The £500 still takes up room in the band, as HMRC's Dividend Allowance factsheet explains, so the allowance does not stretch your basic rate band.

Here is the working for a plumber who runs a one-person limited company, pays himself a salary of £12,570 and takes £40,000 in dividends in 2026/27.

• Total income: £12,570 + £40,000 = £52,570.
• Personal Allowance: £12,570, all used by the salary. The salary is tax-free and the dividends start at the bottom of the basic rate band.
• Dividend allowance: the first £500 of dividends at 0%.
• Basic rate: the band holds £37,700 of taxable income. After the £500, there is room for £37,200 more at 10.75% = £3,999.00.
• Higher rate: the remaining £2,300 of dividends at 35.75% = £822.25.
• Dividend tax for the year: £3,999.00 + £822.25 = £4,821.25, an effective rate of 12.05% on the dividends.
• What the dividends leave: £40,000 − £4,821.25 = £35,178.75.
• The Budget's effect: at last year's 8.75% and 33.75%, the same dividends would have cost £4,031.25. The bill is £790 higher.

Three more directors, three different bills

The salary changes everything above it. These use the same 2026/27 rates and allowances; type them into the calculator to check.

Paying yourself salary and dividends

A director who owns the company can take money out as salary, as dividends, or as a mix of the two. The two are treated differently on both sides of the line, which is why the mix matters.

Salary goes through payroll. The company must register as an employer and take off Income Tax and National Insurance, and pay employer's National Insurance on top. For 2026/27, HMRC's rates for employers put the employee threshold at £12,570 a year and the employer threshold at £5,000, with employer contributions at 15% above it. A company whose only employee is its sole director cannot claim the Employment Allowance to offset that.

Dividends do not go through payroll. They come out of profit that has already had Corporation Tax taken off, and the company cannot deduct them as a cost. gov.uk says it must not pay out more in dividends than the profits it has available, from this year or earlier ones. Each payment needs a directors' meeting to declare it, minutes, and a dividend voucher showing the date, company name, shareholders and amount.

Where the line falls for you depends on your profit, your other income, your pension and your plans for the company. Run both calculators, then take the figures to your accountant rather than copying a salary level you saw online.

How and when you pay it

Nobody takes dividend tax off before the money reaches you. You have to report it and pay it yourself, so set aside a share of each dividend as you take it.

gov.uk's reporting rules: if you already send a Self Assessment tax return, dividends go on it. If you do not, and your dividends are £10,000 or less, tell HMRC after the tax year ends and before 5 October, either by asking for your tax code to be updated or by calling the helpline. Over £10,000, you need a Self Assessment return. You do not need to tell HMRC at all if your dividends are within the £500 allowance.

Income the estimate does not cover

The figure is a guide, not tax advice, for taxpayers in England, Wales and Northern Ireland. The dividend rates themselves apply UK-wide, but Scottish taxpayers pay Scottish rates on salary, and the calculator does not use those.

It assumes the standard Personal Allowance, tapered away above £100,000 of income as gov.uk's Income Tax rates page sets out. It does not include savings interest, rental income, pension contributions, Gift Aid, student loan repayments, Marriage Allowance or the High Income Child Benefit Charge, any of which can change your bands. Dividends from shares held in an ISA are tax-free and should not be entered.

Common questions