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For limited company directors · 2026/27

Dividend tax calculator and salary vs dividend split

2026/27 dividend tax rates

10.75% (basic rate), 35.75% (higher rate) and 39.35% (additional rate), after a £500 tax-free dividend allowance. Most single directors do best with a £12,570 salary and the rest as dividends.

Calculators

Work out your dividend tax

Dividend tax calculator

Dividend tax to pay

£3,171

10.6% of your dividends

Tax and NI on the salary

£0

Take-home from both

£39,399

Best salary and dividend split

Best option: a £12,570 salary plus £29,399 in dividends, leaving you £38,862.

SalaryDividendsCorporation Tax + employer NIYour tax + NIYou keep
£12,570£29,399£8,031£3,107£38,862
£5,000£36,450£8,550£3,051£38,399
£0£40,500£9,500£2,949£37,551
£44,130£0£5,870£8,837£35,294

Estimate only, not tax advice. 2026/27 rates for England, Wales and Northern Ireland; one director with no other income, all profit paid out, no Employment Allowance (not available to single-director companies), no pension contributions.

Rates

Dividend tax rates 2026/27

Band (taxable income)Dividend rate
Dividend allowance (first £500)0%
Basic rate (£12,571 to £50,270)10.75%
Higher rate (up to £125,140)35.75%
Additional rate (over £125,140)39.35%

Bands shown for someone with the standard personal allowance, which is reduced by £1 for every £2 of income over £100,000.

How it works

How dividends are taxed

  1. Your company pays Corporation Tax (19% to 25%) on its profit. Dividends come out of what is left.
  2. Your salary and other income use up your personal allowance and tax bands first.
  3. Dividends sit on top. The first £500 is tax-free, then each band's dividend rate applies.
  4. You pay the tax through Self Assessment by 31 January after the tax year.

Not sure a limited company is worth it? Compare with our sole trader vs limited company calculator. Doing construction work? See the CIS calculator.

Dividend tax FAQs

10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band. The first £500 of dividends is tax-free (the dividend allowance).

It depends on your other income. With a £12,570 salary, £30,000 of dividends would cost £3,171 in dividend tax in 2026/27: the first £500 is tax-free and the rest falls in the basic-rate band.

For a single director with no other income, a salary of £12,570 usually works best in 2026/27, with the rest taken as dividends. At £50,000 of profit that leaves about £38,862. It uses your personal allowance, and the Corporation Tax saved outweighs the employer National Insurance on the salary above £5,000.

Yes. If your salary is below the personal allowance, the unused part covers dividends first, so they are tax-free up to that point. Dividends are treated as the top slice of your income, taxed after salary.

Through Self Assessment, by 31 January after the end of the tax year. If your tax bill is over £1,000 you may also have to make payments on account towards the next year.

Usually yes if you run a limited company, because dividends avoid National Insurance. But if you take all the profit out, a limited company rarely beats being a sole trader on tax alone any more.

General information using 2026/27 rates for England, Wales and Northern Ireland, not tax advice. Scottish Income Tax bands differ for salary, but dividend tax rates are UK-wide.