Answers · UK 2025/26
How much tax will I pay on £85,000 of dividends in 2026/27?
On £85,000 of dividends in 2026/27, the first £500 is covered by the dividend allowance. The remaining £84,500 is taxed at 10.75% if you are a basic-rate taxpayer (£9,083.75), 35.75% if higher-rate (£30,208.75), or 39.35% if additional-rate (£33,250.75).
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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 £85,000 of dividends, £84,500 is taxable after the allowance. At this level, a director's total income (salary plus £85,000 of dividends) is very likely to exceed £100,000, triggering the personal allowance taper -- £1 lost for every £2 of income above £100,000, reaching £0 personal allowance at £125,140. This taper does not change the dividend tax rates directly, but it increases the amount of other income taxed at the basic and higher rates, which can push more of the dividend income into higher bands than the headline rates alone would suggest. £85,000 also puts many directors within reach of the additional rate threshold once combined with even a modest salary, since total income above £125,140 is taxed at the top 45% income tax rate (39.35% for dividends specifically). At this stage, financial planning commonly shifts toward pension contributions, which are deductible against the company's Corporation Tax and do not count as personal income at all, as a way of extracting value without pushing further into the higher dividend and income tax bands. Use the dividend-tax calculator to see the exact band split for your situation.
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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.