WageDividend Tax Calculator 2026-27
This calculator works out the tax due on dividends once they are stacked on top of your other income. The first £500 of dividends is covered by the tax-free dividend allowance; above that, dividends are taxed at 10.75% in the basic band, 35.75% in the higher band and 39.35% in the additional band, depending on where they fall when added to your salary and other income. Enter your salary and dividends, and the calculator shows how much of each rate applies and the total dividend tax.
Dividend tax calculator
| Income tax on salary | £0 |
| National Insurance | £0 |
| Dividends @ 0% (allowance) | £0 |
| Dividends @ 10.75% | £3,999 |
| Dividends @ 35.75% | £822 |
| Total dividend tax | £4,821 |
The £500 dividend allowance is tax-free but still uses band capacity. Dividends are taxed on top of your other income at 10.75% / 35.75% / 39.35% depending on the band they fall in. Estimates, not advice.
| Band | 2026-27 | 2025-26 |
|---|---|---|
| Basic | 10.75% | 8.75% |
| Higher | 35.75% | 33.75% |
| Additional | 39.35% | 39.35% |
Dividends sit on top of your other income
Dividends are taxed after your salary and other income, so they are treated as the top slice of what you receive. That means the rate on your dividends depends on how much other income you already have: the same dividends can be taxed at 10.75%, 35.75% or 39.35% depending on how much basic-rate band is left once your salary is accounted for.
The calculator applies your income in order - salary first, then dividends - so you can see the point at which dividends cross from one band into the next and the rate steps up.
How the allowance is used
The £500 dividend allowance is tax-free, but it is not a straightforward exemption. It still uses up part of the band it sits in, so it does not push the rest of your dividends down into a lower band. The allowance shelters the first slice from tax while the dividends above it are taxed at the rate for whichever band they occupy.
This is why the allowance reduces the tax due without changing which band your remaining dividends fall into. The calculator accounts for this by charging the allowance against band capacity rather than removing dividends from the stack.
Frequently asked questions
What rate will my dividends be taxed at?
After the £500 allowance, dividends are taxed at 10.75%, 35.75% or 39.35% depending on which band they fall into once stacked on top of your salary and other income.
Does the dividend allowance move my dividends into a lower band?
No. The £500 allowance is tax-free but still uses up band capacity, so the dividends above it are taxed at the rate for the band they sit in rather than being shifted down.
General information, not advice. Estimates assume the standard 1257L tax code and typical circumstances; your payslip may differ by a pound or two because HMRC payroll software truncates at each step. Verify with HMRC or an accountant for any decision. WageReckon stores no salary data - the calculators run in your browser.
Sources
Rates for the 2026-27 tax year, current as of 24 July 2026. Source: HMRC (gov.uk). Contains public sector information licensed under the Open Government Licence v3.0. Source: HMRC / gov.uk. See how we calculate.