Dividend tax guide · 2026/27
Tax on £30,000 Dividend Income UK
With £30,000 in dividend income and no other income, the personal dividend tax in 2026/27 is approximately £1,481 — leaving £28,519 after tax. The effective rate is 4.9%. Actual tax depends on your other income, as dividends stack on top of salary and other sources.
Gross dividends
£30,000
Before personal dividend tax
Dividend tax (no other income)
£1,481
After £500 allowance & PA
Net after tax
£28,519
Effective rate: 4.9%
Band-by-band breakdown (no other income)
Dividends use the Personal Allowance first (£12,570), then the £500 dividend allowance. The remainder falls into the basic, higher, or additional rate dividend bands.
| Band | Rate | Applies to | Tax |
|---|
| Personal Allowance | 0% | First £12,570 | £0 |
| Dividend allowance | 0% | Next £500 | £0 |
| Basic rate | 8.75% | Up to £50,270 total income | £1,481 |
| Higher rate | 33.75% | £50,271–£125,140 | £0 |
| Additional rate | 39.35% | Above £125,140 | £0 |
| Total dividend tax | £1,481 |
⚠ How other income changes the calculation
Dividends stack on top of all other income — salary, self-employed profits, savings interest. This means dividends often fall into higher tax bands than they would alone.
- If you earn a salary of £50,000 and take £30,000 dividends, the dividends all fall in the higher rate band (33.75%) rather than the basic rate (8.75%)
- The Personal Allowance is already used by your salary — you don't get it twice
- For directors: company dividends are paid from post-corporation-tax profit, so total tax efficiency depends on CT rate paid too
Always model dividends alongside your total income. Use the dividend tax calculator for an accurate figure based on your specific situation.
Dividend rates 2026/27
| Rate | Band | On income falling in |
|---|
| 0% | Dividend allowance | First £500 of dividends |
| 8.75% | Basic rate | Basic rate band (up to £50,270 total income) |
| 33.75% | Higher rate | Higher rate band (£50,271–£125,140) |
| 39.35% | Additional rate | Additional rate band (above £125,140) |
The £500 dividend allowance is per person, per tax year. It has reduced significantly in recent years — from £5,000 in 2017/18 to £500 from 2024/25.
Frequently asked questions
Do I pay NI on dividend income?
No. Dividend income is not subject to National Insurance — neither employee nor employer NI. This is one of the reasons company directors often extract income as dividends rather than salary. However, dividends come from post-corporation-tax profit, so CT has already been paid on the underlying profit.
Do I need to declare dividends on a tax return?
If dividends exceed the £500 allowance and the total is above your tax-free thresholds, you need to declare them on a Self Assessment tax return. Most company directors already complete Self Assessment. If dividends are your only income source and they fall within your Personal Allowance plus dividend allowance, you may not owe any tax.
What about dividends inside an ISA?
Dividends earned inside a Stocks & Shares ISA are completely tax-free — they don't count towards your £500 allowance or your taxable income at all. This makes ISAs valuable for dividend-generating investments.
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