UK Dividend Tax Calculator 2025/26
Calculate how much tax you’ll pay on dividend income from UK shares, funds, and ISAs.
Income Breakdown
| Item | Amount | Tax-Free |
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Dividend Tax Calculation
| Band | Amount | Rate | Tax Due |
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Enter your income and dividend amounts to calculate dividend tax liability.
UK Dividend Tax Calculator 2025/26
Use our free Dividend Tax Calculator to calculate exactly how much tax you’ll owe on dividend income from UK shares, investment funds, and REITs. Updated for the 2025/26 tax year with current Dividend Allowance of £500.
Dividend Allowance 2025/26
The Dividend Allowance lets you earn a certain amount of dividend income tax-free each year. For 2025/26:
£500 tax-free dividend allowance (reduced from £2,000 in 2023/24 and £1,000 in 2024/25)
This means the first £500 of dividend income is taxed at 0%. However, these dividends still count towards your total income for determining which tax bands apply to your remaining income.
Dividend Tax Rates 2025/26
Dividend tax rates depend on your total taxable income (salary + dividends + other income). The rates for 2025/26 are:
| Tax Band | Total Income Range | Dividend Tax Rate |
|---|---|---|
| Personal Allowance | £0 to £12,570 | 0% |
| Basic Rate | £12,571 to £50,270 | 8.75% |
| Higher Rate | £50,271 to £125,140 | 33.75% |
| Additional Rate | Over £125,140 | 39.35% |
Important: The Dividend Allowance sits on top of your Personal Allowance. You can use both simultaneously — dividends within the £500 allowance are taxed at 0%, while other income within your £12,570 Personal Allowance is also tax-free.
How Dividend Tax Works
Dividend tax is calculated after considering all your income sources. Here’s the calculation process:
- Calculate total income: Add salary, dividends, and any other taxable income
- Apply Personal Allowance: First £12,570 of total income is tax-free (may reduce if income over £100,000)
- Apply Dividend Allowance: First £500 of dividends is taxed at 0%
- Determine tax bands: Remaining dividends are taxed based on which tax band your total income falls into
- Subtract ISA dividends: Dividends from shares held within an ISA wrapper are completely tax-free and don’t count towards your taxable income
Dividend Income Examples
| Scenario | Salary | Dividends | Tax Due |
|---|---|---|---|
| Basic rate taxpayer, moderate dividends | £35,000 | £5,000 | ~£394 |
| Higher rate taxpayer | £60,000 | £10,000 | ~£3,206 |
| Within allowance | £30,000 | £500 | £0 (covered by allowance) |
| ISA wrapper | £40,000 | £15,000 (in ISA) | £0 (ISA dividends tax-free) |
ISA Dividends – Completely Tax-Free
Dividends from shares held within an Individual Savings Account (ISA) are completely tax-free. This includes:
- Stocks and Shares ISA dividends
- Investment Trust ISAs
- Index fund ETF dividends
There’s no limit to how much dividend income you can earn tax-free within an ISA — only the overall ISA contribution limit applies (£20,000 per tax year for 2025/26).
Strategy tip: Hold high-dividend investments inside your ISA to eliminate dividend tax entirely.
Frequently Asked Questions
How much tax will I pay on £10,000 dividends?
With no other income, you’d pay £0 on the first £500 (allowance) and 8.75% on the remaining £9,500 = £831.25. With £35,000 salary plus £10,000 dividends, you’d be in the higher rate band and pay approximately £3,206.
Do dividends count as income for mortgage applications?
Yes. Lenders typically count 50-100% of regular dividend income when assessing mortgage affordability, depending on your employment contract and the consistency of dividends. Keep records of dividend statements for 12+ months.
Do I need to report dividends through Self Assessment?
You must report dividends through Self Assessment if: (a) total dividend income exceeds £10,000 before allowances, (b) you’re already filing a tax return for other reasons, or (c) your total income exceeds £100,000. Otherwise, dividends under £5,000 can be reported through PAYE.
What are “grossing up” rules for dividends?
Dividends are paid from post-tax corporate profits and receive a 10% tax credit in theory, but since 2016 the tax credit has been abolished. Instead, you receive a £500 allowance. No longer need to gross up dividends for tax purposes.
Can I carry forward unused dividend allowance?
No. The £500 dividend allowance resets each tax year and cannot be carried forward. Use it or lose it — dividends received outside the allowance period are lost forever.
Do foreign dividends count towards UK dividend allowance?
Yes. All dividend income worldwide counts towards your £500 allowance, including US stocks, Irish-domiciled ETFs, and foreign REITs. Foreign withholding taxes may be reclaimable depending on double taxation treaties.
Is there a difference between UK and international dividend tax?
UK dividends have a £500 allowance and follow the UK rates shown above. International dividends are taxed at the same rates but may be subject to foreign withholding tax (typically 15% on US stocks). You can usually claim credit for withholding tax against your UK liability.
Related Calculators
- → Income Tax & NI Calculator — Calculate your total tax liability including salary and dividends
- → Capital Gains Tax Calculator — Calculate CGT on share disposals separate from dividends
- → Pension Calculator — Project retirement income including dividend sources