What your dividends really cost in tax
Dividends sit on top of your other income — see exactly which band each slice lands in.
Everything except dividends — salary, rent, pension income
Total taken, before tax
Dividend tax to pay
£3,171.25
10.6% of the dividends you took
Tax-free allowance
£500.00
Uses up band space, it is not removed from income
Taxable dividends
£30,000
Rate on your next £1,000
10.8%
If you take more before 5 April
| Dividend allowance — 0.0% On £500 | £0.00 |
|---|---|
| Basic rate — 10.8% On £29,500 | £3,171.25 |
| Total dividend tax | £3,171.25 |
How and when you pay this
Figures for the 2026/27 UK tax year. Rates last checked against HMRC on 2026-08-28. See every source.
How to work out your dividend tax
Dividend tax cannot be worked out from the dividend alone. Dividends are treated as the top slice of your income, so the same £30,000 costs one director far more than another depending on what salary sits underneath it. This calculator takes both figures and shows where each slice lands. Two details catch people out: the dividend allowance is taxed at 0% but still uses up band space rather than being removed from your income, and the basic and higher dividend rates rose by two percentage points from April 2026 while the additional rate did not move. Rates shown are the 2026/27 figures published by HMRC.
- 1Enter your salary and any other income — everything except dividends.
- 2Enter the total dividends you have taken, or plan to take, in the tax year.
- 3Read the total, then check the slice table to see which band each part fell into.
- 4Look at the rate on your next £1,000 before deciding whether to take more before 5 April.
FAQ
Why did my dividend tax jump when I took only a little more?
Because dividends stack on top of your other income, the last pound you take is always taxed at your highest rate. If your total income was sitting just below a band boundary, a small extra dividend crosses it and that part is taxed at the higher rate. Splitting the payment across two tax years keeps more of it in the lower band.
Is the dividend allowance the same as tax-free income?
Not quite. The allowance is taxed at 0%, but it still occupies space in your tax band rather than being taken out of your income. That matters when your income is near a boundary: the allowance can push later dividends into the next band even though no tax was paid on the allowance itself.
When do I actually pay this?
Through Self Assessment, not at source, so the money is due long after the dividend reaches your account. If the bill is over £1,000 you will also be asked for payments on account — half the bill again the following January and the same again in July.