UK Salary and Dividend Tax Calculator 2026/27
By Simon Austerberry, Founder of Quarterday
Work out the tax on your salary and dividends, when you must pay it, and how much to save each month.
Salary, dividends and tax bands change through the year. Quarterday recalculates your tax and your safe-to-spend number each time they do.
How your dividend is taxed in 2026/27
Dividend tax in 2026/27 has four bands. The first £500 is tax-free, then rates rise from 10.75% to 39.35% as your income grows.
| Band | Dividend income | 2026/27 | 2025/26 |
|---|---|---|---|
| Dividend allowance (nil rate) | The first £500 of dividends | 0% | 0% |
| Basic rate | £0 to £37,700 | 10.75% | 8.75% |
| Higher rate | £37,701 to £125,140 | 35.75% | 33.75% |
| Additional rate | Over £125,140 | 39.35% | 39.35% |
How the dividend allowance works
The first £500 of dividends is charged at 0%. This is a nil rate band, not a tax-free deduction.
The £500 still counts as income. It fills the first part of whichever tax band you are in, so it does not create extra space in a lower band.
What changed on 6th April 2026?
The basic rate and the higher rate each rose by 2 percentage points. The additional rate did not change and the £500 dividend allowance did not change.
Dividend tax rates by year
How your salary is taxed in 2026/27
Salary tax in 2026/27 has three bands above your £12,570 personal allowance. Income Tax rises from 20% to 45%. National Insurance falls from 8% to 2%.
| Band | Taxable income | Income tax | Employee National Insurance |
|---|---|---|---|
| Personal allowance | Up to £12,570 | 0% | 0% |
| Basic rate | £12,571 to £50,270 | 20% | 8% |
| Higher rate | £50,271 to £125,140 | 40% | 2% |
| Additional rate | Over £125,140 | 45% | 2% |
Your salary is taxed first. Your dividends sit on top of it. The salary therefore decides which band your dividends fall in.
Dividends carry no National Insurance. Your company pays Corporation Tax on its profit before it declares a dividend.
Personal allowance taper
The personal allowance falls by £1 for every £2 of total income above £100,000, and reaches £0 at £125,140. Dividends count towards that £100,000.
How much tax will I pay on £20,000 to £125,000 of dividends?
These figures assume a salary of £12,570, no other income and the 2026/27 rates. They show dividend tax only.
| Dividends | Tax 2026/27 | Tax 2025/26 | Increase | Tax each month |
|---|---|---|---|---|
| £20,000 | £2,096.25 | £1,706.25 | £390.00 | £174.69 |
| £30,000 | £3,171.25 | £2,581.25 | £590.00 | £264.27 |
| £40,000 | £4,821.25 | £4,031.25 | £790.00 | £401.77 |
| £50,000 | £8,396.25 | £7,406.25 | £990.00 | £699.69 |
| £70,000 | £15,546.25 | £14,156.25 | £1,390.00 | £1,295.52 |
| £100,000 | £27,842.50 | £25,852.50 | £1,990.00 | £2,320.21 |
| £125,000 | £38,798.73 | £36,557.33 | £2,241.40 | £3,233.23 |
How the tax calculation works
Your salary is taxed first. Your dividends sit on top of it. So the same dividend can produce two different bills for two different people.
The calculator follows four steps, in this order.
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Add up your income
Add your salary, your dividends and any other taxable income. This total decides your personal allowance.
Your personal allowance is £12,570. It falls by £1 for every £2 of total income above £100,000. It reaches £0 at £125,140. Dividends count towards that £100,000.
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Tax your salary
Set the personal allowance against your salary and any other non-dividend income first. Tax what is left at 20% up to £37,700 of taxable income, then 40% up to £125,140, then 45%.
Employee National Insurance applies to the salary only. The rate is 0% up to £12,570, then 8% up to £50,270, then 2%.
The calculator treats National Insurance as an annual figure. A company director always has an annual earnings period, however often the company pays them.
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Stack the dividends on top
Whatever band space your salary leaves, your dividends fill. The first £500 of dividends is charged at 0%. The rest is charged by band: 10.75%, then 35.75%, then 39.35%.
One dividend can fall into multiple bands. The calculator splits it and charges each part at the correct rate.
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Work out when you pay
Dividend tax is not paid at source. You declare them on a Self Assessment return and pay the tax later.
The tax on dividends earned in the 2026/27 tax year is due on 31 January 2028. If your bill is more than £1,000, you also make payments on account towards the following year. Each one is half of your tax bill. The first falls due on 31 January 2028 and the second on 31 July 2028.
Ready to stop calculating this yourself?
Quarterday is built for UK freelancers who run their own limited company. It tracks your tax, your bills and your savings target automatically.
When do I pay tax on my dividends?
Tax is paid through Self Assessment, after the tax year ends.
Tax on dividends taken in the 2026/27 tax year is due on 31 January 2028. If your bill is more than £1,000, you also make a payment on account on that same date, and a second on 31 July 2028. Each payment on account is half of your 2026/27 bill, paid towards your 2027/28 bill.
What are the dividend tax rates for 2026/27
The basic rate is 10.75%, the higher rate is 35.75% and the additional rate is 39.35%.
The basic and higher rates each rose by 2 percentage points on 6 April 2026, from 8.75% and 33.75%. The additional rate did not change. These rates apply across the whole United Kingdom.
How much is the dividend allowance?
It is £500 for 2026/27, unchanged from 2025/26.
The allowance is a nil-rate band, not a deduction. The first £500 of dividends is charged at 0%, but it still uses up £500 of whichever tax band it falls in. It does not create extra basic rate band, and it does not move the £100,000 or £125,140 thresholds.
What are payments on account?
They are advance payments towards your next Self Assessment bill.
HMRC asks for them when your bill is more than £1,000 and tax at source (such as PAYE) does not cover 80% of it. Each payment is half of your previous bill. The first falls due on 31 January, the second on 31 July. You can ask HMRC to reduce them if you expect to earn less.
Do I pay National Insurance on dividends?
No. Dividends carry no National Insurance.
This is why a low salary and dividends usually costs less than a large salary. Your company still pays Corporation Tax on its profit before it can declare a dividend, and it pays employer National Insurance at 15% on a salary above £5,000.
Do dividends push me into a higher tax band?
Yes, they can do. Dividends are the top slice of your income.
Your salary and any other income are taxed first and use up your basic rate band. Your dividends then fill whatever band space is left. Dividends also count towards the £100,000 point where your personal allowance starts to fall, £1 for every £2 above it.
Do dividend rates differ in Scotland?
No. Dividend tax is not devolved, so the 10.75%, 35.75% and 39.35% rates apply to Scottish taxpayers too.
Scottish rates and bands apply to your salary instead. This calculator uses the rates for England, Wales and Northern Ireland, so the salary figures will not match a Scottish payslip.
What this calculator assumes
- You are a UK taxpayer outside of Scotland.
- You take a salary and dividends from your own limited company.
- Your company has enough retained profit to pay the dividends you enter.
- Your company pays your salary through PAYE.
- You receive the full personal allowance of £12,570, unless your income exceeds £100,000.
- You use tax code 1257L.
- Your company does not claim the Employment Allowance.
- All income falls within the tax year you select.
- National Insurance is worked out on an annual basis. This is correct for a company director.
What this calculator does not include
This calculator does not include Corporation Tax, employer National Insurance, student loan repayments, pension contributions, salary sacrifice, the marriage allowance, Gift Aid, the High Income Child Benefit Charge, capital gains, savings interest, rental income, dividends from shares held outside your company, Scottish income tax rates, or a claim to reduce your payments on account.
This calculator gives an estimate based on the figures you enter, from HMRC's published rates, checked each April. Check your position with a qualified accountant before you act on it. HMRC publishes the rules at Tax on dividends.
Updated 16 Sep 2026