2026/27 estimate

Dividend Tax on £40,000 Dividends 2026/27

After the £500 dividend allowance, a basic-rate taxpayer (£30,000 salary) pays approximately £9,054 in dividend tax, and a higher-rate taxpayer (£55,000 salary) pays approximately £14,121.

Basic-rate taxpayer scenario
£30,000 salary + £40,000 dividends
Dividend income
£40,000
Allowance used
£500
Taxable dividends
£39,500
Dividend tax due
£9,054
£20,270 at 10.75% basic rate · £19,230 at 35.75% higher rate
Effective dividend rate: 22.6% · Net dividends: £30,946
Higher-rate taxpayer scenario
£55,000 salary + £40,000 dividends
Dividend income
£40,000
Allowance used
£500
Taxable dividends
£39,500
Dividend tax due
£14,121
£39,500 at 35.75% higher rate
Effective dividend rate: 35.3% · Net dividends: £25,879

How dividend tax on £40,000 is calculated

Step 1 — Apply the Personal Allowance. Your salary fills the Personal Allowance (£12,570) first. Any unused allowance then shelters dividend income. With a £30,000 salary the full PA is used by the salary, so dividends get none of it. With a £55,000 salary the same applies.

Step 2 — Subtract the £500 dividend allowance. The first £500 of dividends above the PA is tax-free. After that, £39,500 is taxable (assuming salary fully uses the PA).

Step 3 — Dividends sit on top of salary. Your salary fills the basic-rate band (up to £50,270) first. A £30,000 salary leaves £20,270 of the basic-rate band for dividends — so most or all of £40,000 are taxed at 10.75%. A £55,000 salary exceeds the basic-rate limit, so dividends fall straight into the higher-rate band at 35.75%.

2026/27 rates: 10.75% basic · 35.75% higher · 39.35% additional · £500 dividend allowance · Personal Allowance £12,570.

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Dividend tax for other amounts
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Estimates only — not financial or tax advice. 2026/27 figures. Scenarios use fixed salaries of £30,000 (basic-rate) and £55,000 (higher-rate) for illustration. Your actual tax depends on your full income, allowances, pension contributions and other circumstances. Consult a tax adviser or check GOV.UK: Tax on dividends.