Dividend Tax Calculator 2025-26

Calculate tax on dividends with the £500 dividend allowance and rates for basic, higher and additional rate taxpayers.

Last updated: April 2026 · Source: GOV.UK — Tax on dividends

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Disclaimer

This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.

How It Works

UK dividends are taxed at special rates that are lower than income tax rates. For 2025/26, the tax-free dividend allowance is £500. Dividends above this are taxed at 8.75% (basic rate), 33.75% (higher rate) or 39.35% (additional rate).

Dividends are added on top of your other income to determine which band they fall into. If your salary already uses up the basic-rate band, your dividends will be taxed at the higher rate. Company directors often optimise the salary/dividend split to minimise total tax.

Dividends received within an ISA or pension are tax-free and do not count towards the dividend allowance. The allowance was reduced from £1,000 in 2023/24 to £500 from 2024/25 onwards.

Example: £12,570 salary + £40,000 dividends

  1. Salary uses Personal Allowance: £0 income tax
  2. First £500 dividends: tax-free (dividend allowance)
  3. Next £37,200 dividends (basic rate band): 8.75% = £3,255
  4. Remaining £2,300 dividends (higher rate): 33.75% = £776.25
  5. Total dividend tax: £4,031.25

Source: GOV.UK — Tax on dividends

Frequently Asked Questions

What is the dividend allowance for 2025/26?
The tax-free dividend allowance for 2025/26 is £500. Dividends above this are taxed at 8.75% (basic rate), 33.75% (higher rate) or 39.35% (additional rate).
How are dividends taxed in the UK?
Dividends are added on top of your other income and taxed at special rates. After the £500 tax-free allowance, basic-rate taxpayers pay 8.75%, higher-rate taxpayers pay 33.75%, and additional-rate taxpayers pay 39.35%.