2025/26 Tax Year
Calculate how much tax you owe on UK dividend income. Covers basic, higher and additional rate taxpayers — updated for 2025/26.
Enter your dividend income and any other income, then hit Calculate to see your full dividend tax breakdown.
| Band | Rate |
|---|---|
| Dividend allowance | 0% (first £500) |
| Basic rate (up to £50,270) | 8.75% |
| Higher rate (£50,271–£125,140) | 33.75% |
| Additional rate (above £125,140) | 39.35% |
| Item | Amount |
|---|---|
| Personal allowance | £12,570 |
| Dividend allowance | £500 |
| Basic rate band top | £50,270 |
| PA taper starts | £100,000 |
| PA reaches zero | £125,140 |
UK dividend tax applies to income received from shares held outside an ISA or pension. Every individual receives a £500 dividend allowance — the first £500 of dividends is taxed at 0%, regardless of your income tax band. The allowance does not mean dividends are tax-free; it means the rate on that portion is zero. Dividends above the allowance are taxed at 8.75%, 33.75% or 39.35% depending on your total income.
Dividends are paid from company profits that have already been subject to Corporation Tax (currently 25% for profits above £250,000). The lower dividend tax rates reflect this — the total tax burden across the company and shareholder is broadly comparable to the combined income tax and NI on a salary. For limited company directors, this creates a planning opportunity: the combination of a low salary and dividends can be more tax-efficient than salary alone, particularly for the National Insurance saving.
Dividend tax affects shareholders in listed and unlisted companies, limited company directors who pay themselves via dividends, and investors holding shares outside an ISA. Notably, Scottish taxpayers pay UK dividend tax rates — not the Scottish income tax rates that apply to their salary. Dividends held inside a Stocks & Shares ISA are entirely exempt from UK dividend tax.
£500. You pay no dividend tax on the first £500 of dividend income each tax year, regardless of your income tax band. This was cut from £1,000 in 2024/25 and £2,000 the year before.
Basic rate taxpayers (total income up to £50,270) pay 8.75%. Higher rate taxpayers (£50,271–£125,140) pay 33.75%. Additional rate taxpayers (above £125,140) pay 39.35%. All rates apply only to dividends above the £500 allowance.
No. Dividends from a Stocks & Shares ISA are completely tax-free and do not count towards your dividend allowance or affect your personal allowance calculation.
Yes. If your total income — including dividends — exceeds £100,000, your personal allowance reduces by £1 for every £2 above that threshold. It reaches zero at £125,140, creating an effective 60% marginal rate in this band.
Many directors set a salary at £12,570 to use the personal allowance while avoiding employee and employer National Insurance above the secondary threshold, then take additional income as dividends. This typically results in lower overall tax and NI than taking a higher salary. Always consult a qualified accountant before implementing this strategy.
If your dividends plus other income exceed your personal allowance AND dividends exceed £500, you must file a Self Assessment tax return. If you are not already registered, notify HMRC by 5 October after the end of the relevant tax year. Small amounts of dividend income (under £500 or within your unused personal allowance) may not need to be reported.
This calculator is for guidance only. Dividend tax rates and thresholds are correct for the 2025/26 tax year. Scottish taxpayers pay UK dividend rates (not Scottish income tax rates) on dividend income. Always consult a qualified accountant or tax adviser for personalised advice. SterlingCalc accepts no liability for decisions made based on these estimates.