Dividend Tax Calculator UK 2026/27
Calculate dividend tax for UK limited company directors. Enter your salary and dividend amounts to see your income tax, dividend tax, corporation tax, and total take-home pay for the 2026/27 tax year.
Results
Full Tax Breakdown
| Category | Rate | Taxable Amount | Tax |
|---|---|---|---|
| Salary (£12,570) | |||
| Income Tax on Salary (within Personal Allowance) | 0% | £0 | £0 |
| Employee National Insurance | 8% / 2% | £0 | £0 |
| Employer NI (company cost) | 15% | £7,570 | £1,136 |
| Dividends (£30,000) | |||
| Dividend Allowance (first £500) | 0% | £500 | £0 |
| Basic Rate Band (10.75%) | 10.75% | £29,500 | £3,171 |
| Higher Rate Band (35.75%) | 35.75% | £0 | £0 |
| Additional Rate Band (39.35%) | 39.35% | £0 | £0 |
| Corporation Tax (25%) | |||
| Corp Tax on profits used for dividends | 25% | £40,000 | £10,000 |
| Total Personal Tax (excl. Employer NI & Corp Tax) | £3,171 | ||
| Total Combined Tax Burden (incl. Employer NI + Corp Tax) | £14,307 | ||
| Net Take-Home Pay | £39,399 |
Where Does Your Money Go?
How your total company gross (£53,706) is split between take-home and each tax.
vs Taking This as a PAYE Salary
What if you received the same £42,570 as a pure PAYE employee salary instead of salary + dividends? Your personal taxes would be much higher.
| Category | Director Strategy | PAYE Equivalent |
|---|---|---|
| Total Personal Gross | £42,570 | £42,570 |
| Income Tax | £0 | £6,000 |
| Employee NI | £0 | £2,400 |
| Dividend Tax | £3,171 | — |
| Total Personal Tax | £3,171 | £8,400 |
| Net Take-Home Pay | £39,399 | £34,170 |
| Director strategy saves £5,229 in personal tax compared to PAYE | ||
Note: This comparison shows personal tax only. The director strategy also involves corporation tax on company profits, while PAYE salary is fully deductible for the company. A qualified accountant can advise on the optimum structure for your situation.
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Go to Saving Tool Advanced →Why Do Limited Company Directors Use Salary + Dividends?
Most UK limited company directors structure their remuneration as a combination of a small salary and dividends. This is more tax-efficient than taking a large salary because:
- Dividends are not subject to National Insurance, saving both employee NI (8–2%) and employer NI (15%) compared to an equivalent salary.
- Dividend tax rates are lower than income tax rates at the same income level (10.75% vs 20% in the basic rate band, 35.75% vs 40% in the higher rate band).
- The company pays corporation tax on its profits, but the combined burden of corporation tax + dividend tax is generally lower than income tax + NI on the equivalent salary.
The £12,570 Salary Strategy Explained
Most directors set their salary at exactly £12,570, the Personal Allowance. Here's why:
- The salary is fully covered by the Personal Allowance, so zero income tax is due on it.
- At £12,570 the salary sits at the employee NI threshold, so no employee NI is payable.
- The company can deduct the salary as a business expense, reducing its taxable profit and therefore corporation tax.
- The salary keeps the director's National Insurance record active, protecting their entitlement to the State Pension and other contributory benefits.
Note: employer NI is payable on salary above £5,000 (the secondary threshold from April 2025). On a £12,570 salary this amounts to £1,135.50. Sole directors are not eligible for the Employment Allowance.
Dividend Allowance 2026/27
Every individual receives a £500 dividend allowance each tax year. The first £500 of dividend income is tax-free (above the Personal Allowance). This was cut from £2,000 to £1,000 in April 2023, and again from £1,000 to £500 in April 2024, and remains at £500 for 2026/27.
When Do Higher Rates Kick In?
Dividend tax rates increase as your total income crosses the rate band thresholds:
- 10.75% on dividends within the basic rate band (total income up to £50,270)
- 35.75% on dividends within the higher rate band (total income £50,271–£125,140)
- 39.35% on dividends within the additional rate band (total income above £125,140)
Remember that salary and dividends stack: salary sits in the lower bands first, and dividends fill the remaining space above.
Self Assessment and Dividend Payments
Dividend income must be reported on a Self Assessment tax return. Directors typically pay dividends quarterly or annually. Key points:
- Dividends can only be paid from distributable profits (the company must have made sufficient profits after tax).
- A dividend voucher must be issued each time a dividend is paid, showing the company name, date, amount, and shareholder details.
- If dividends are paid without sufficient profits, they become illegal dividends (also called ultra vires dividends) and must be repaid.
- The Self Assessment deadline is 31 January following the end of the tax year, with payment due on the same date.
Notes
- Rates and thresholds shown are for the 2026/27 tax year (6 April 2026 – 5 April 2027).
- The dividend allowance is £500 for 2026/27 (reduced from £1,000 in 2024/25).
- Corporation tax is simplified: this calculator uses either 19% (small profits rate, applicable to profits ≤ £50,000) or 25% (main rate, profits ≥ £250,000). Marginal relief applies between £50,000 and £250,000. Consult your accountant.
- The employer NI secondary threshold changed to £5,000 from April 2025. Sole directors are not eligible for the £5,000 Employment Allowance.
- This calculator does not account for Personal Allowance tapering (income above £100,000), pension contributions, or other reliefs.
- This calculator provides estimates only and does not constitute financial or tax advice. Consult a qualified accountant or tax adviser for personalised guidance.
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