Answers · UK 2025/26
How much tax will I pay on £40,000 of dividends in 2026/27?
On £40,000 of dividends in 2026/27, the first £500 is covered by the dividend allowance. The remaining £39,500 is taxed at 10.75% if you are a basic-rate taxpayer (£4,246.25), 35.75% if higher-rate (£14,121.25), or 39.35% if additional-rate (£15,543.25).
Full answer
Dividends in 2026/27 have a tax-free dividend allowance of £500. 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 which band the dividends fall into once stacked on top of your other income. On £40,000 of dividends, £39,500 is taxable after the allowance. At £40,000, a company director on a typical £9,100 salary would have combined income of £49,100 -- still just within the £50,270 basic-rate threshold, so the whole dividend amount is taxed at 10.75%, giving £4,246.25. Push combined income even slightly above £50,270, however, and the portion above the threshold jumps to the 35.75% higher dividend rate, so the split between basic and higher rate for £40,000 of dividends depends heavily on exactly how much salary or other income is taken alongside it. Use the dividend-tax calculator to model the exact band split for your own salary and dividend combination.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.