Dividend tax calculator
For company directors taking a salary and dividends. Dividend rates rose two points in April 2026, so figures from older calculators will understate the bill.
How this is calculated
The personal allowance is applied to salary first. Any part of it left over is then set against dividends before the separate £500 dividend allowance.
Dividends are treated as the top slice of income, so they are taxed at whatever band your salary has already taken you into. Increasing salary pushes dividends into higher bands.
National Insurance is charged on the salary only. Dividends carry no National Insurance at all, which is the reason the salary and dividend split exists.
Corporation tax is not shown. The company pays that on profit before any dividend can be declared, so the total tax on the profit is higher than the figure here.
Rates used · 2026/27
| Dividend allowance | £500 |
| Basic rate dividends | 10.75% |
| Higher rate dividends | 35.75% |
| Additional rate dividends | 39.35% |
| National Insurance on dividends | none |
| Corporation tax | not included here |
Last checked July 2026. Source: HMRC and gov.uk.
Worked example
A director on a £12,570 salary with £40,000 of dividends pays no income tax or National Insurance on the salary, since it exactly uses the personal allowance. After the £500 dividend allowance, £39,500 of dividends is taxable: £37,700 at 10.75% and £1,800 at 35.75%, giving £4,696 of tax and £47,874 kept.
Common questions
Why did my dividend tax go up in 2026?
The basic and higher rates both rose by two percentage points from 6 April 2026, announced at the Autumn 2025 Budget. The additional rate was unchanged.
What salary should a director take?
A common approach is a salary around the personal allowance, then dividends on top. The right answer depends on employer NI, the Employment Allowance and whether you need qualifying years for the State Pension, so it is worth advice.
Does this include corporation tax?
No. The company pays corporation tax on its profit first, and dividends come out of what is left. The figure here is your personal tax only.
Are dividends still worth it?
Generally yes, because they carry no National Insurance, but the two-point rise has narrowed the gap against salary. Model both before deciding.