Answers · UK 2025/26
Do I pay National Insurance on dividends?
No. Dividends are investment income, not earned income, so they are exempt from National Insurance. You pay only dividend tax: 0% on the £500 dividend allowance, then 10.75% (basic), 35.75% (higher) or 39.35% (additional) in 2026/27 depending on your total income band.
Full answer
Dividends sit outside the NI system because NI only attaches to earnings from employment or self-employment trading profits. This is a key reason why limited-company directors often pay themselves a small "tax-efficient" salary close to the Primary Threshold (£12,570) and take the rest as dividends — no employee or employer NI applies to the dividend portion. Dividend tax rates for 2026/27: £500 dividend allowance taxed at 0%, then 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band (the ordinary and upper rates rose 2pp from 6 April 2026). Dividends use your basic Personal Allowance first if there is room. Example: salary £12,570 + dividends £40,000. Tax: £500 at 0%; the next £37,200 at 10.75% = £3,999; the remaining £2,300 at 35.75% = £822. Total dividend tax £4,821. Compare carefully to a salary-only route when planning director pay.
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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.