What are the dividend tax rates for 2025/26?

After the £500 dividend allowance, dividends are taxed at 8.75% within the basic-rate band, 33.75% in the higher-rate band, and 39.35% in the additional-rate band. The band depends on your total income because dividends stack on top.

How much is the dividend allowance in 2025/26?

The dividend allowance is £500. The first £500 of dividends is taxed at 0%, although it still uses up part of your tax band. It was cut from £1,000 in 2024/25 and £2,000 in earlier years.

Do dividends use my personal allowance?

Yes. If you have unused personal allowance after your other income, dividends can fall within it tax-free. Only once your personal allowance and the £500 dividend allowance are used do the 8.75%/33.75%/39.35% rates apply.

Why does my salary affect my dividend tax?

Dividends are treated as the top slice of income, so your salary and other income decide which band the dividends land in. A higher salary pushes more of your dividends into the 33.75% or 39.35% bands.

UK Dividend Tax Calculator 2026

Email me this result

Get this tool's output sent to your inbox, plus one useful tool a week. No spam, unsubscribe any time.

UK dividends are taxed separately from salary, with their own allowance and rates, and are treated as the top slice of your income. This calculator stacks your dividends on top of your other income for 2025/26 and applies the correct band rates.

How it works

After any unused personal allowance, the first £500 of dividends falls in the dividend allowance and is taxed at 0% (though it still occupies the band). Remaining dividends are taxed by the band they sit in once stacked on top of your other income: 8.75% in the basic-rate band (up to £50,270 total income), 33.75% in the higher-rate band (to £125,140), and 39.35% above that.

taxable dividends = dividends − unused personal allowance − £500 allowance
rate = 8.75% / 33.75% / 39.35% depending on the band the slice falls in

Example

With £30,000 of salary and £10,000 of dividends, the salary uses the personal allowance. After the £500 dividend allowance, £9,500 of dividends is taxable. Total income (£40,000) stays within the basic-rate band, so all £9,500 is taxed at 8.75% = £831.25, an effective rate of about 8.3% on the dividends.

Notes

Estimate only, not tax advice. Models 2025/26 dividend tax with the £500 allowance and 8.75% / 33.75% / 39.35% rates, stacking dividends on top of other income and tapering the personal allowance above £100,000. Dividends inside an ISA are tax-free and not counted here. Verify at gov.uk.