Investment Dividend Tax Calculator 2026/27

Worked examples: portfolio dividends for a £35,000 earner

These cases are for dividends from shares and funds held outside an ISA or a pension. Dividends inside an ISA or pension are not taxed and do not use your allowance.

2026/27 rates. Dividends from shares and equity funds held outside an ISA or pension. A bond fund's interest distributions would be taxed as savings income instead.

The first £500 is covered by the dividend allowance, so a small portfolio pays little or nothing. At £20,000 of dividends the income crosses into the higher-rate band and part is taxed at 35.75%.

How investment dividends are reported and sheltered

• Dividends above £10,000 in a tax year must be reported through Self Assessment.
• Between £500 and £10,000, you can ask HMRC to collect the tax through your tax code instead, or report it on a Self Assessment return if you already file one.
• New ISA subscriptions of up to £20,000 a year shelter future dividends from tax completely.
• Accumulation funds still pay dividends for tax purposes even though they are reinvested, so they count towards the figures above.

Working out tax on a portfolio's dividends

Start from the dividends paid in the tax year, not the value of the portfolio. Your broker's or platform's annual tax statement (often called a consolidated tax certificate) lists every dividend paid between 6 April and 5 April. Add the UK dividends, the dividend distributions from funds and investment trusts, and foreign dividends in pounds before any foreign tax. Leave out anything held in an ISA, a SIPP or another pension: that income is not taxed and does not use your allowance.

Not every payment from an investment is a dividend. Funds that invest mainly in bonds or cash usually pay interest distributions, which are taxed as savings income with the Personal Savings Allowance, not as dividends. Property income distributions from a REIT are taxed as property income. Your tax voucher says which type each payment is, so check it before you enter the total here.

The dividends are then taxed as the top slice of your income, after your salary or pension: the first £500 at 0%, then 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% above £125,140. Selling investments is a separate tax: gains are Capital Gains Tax, with its own £3,000 annual exempt amount and rates of 18% and 24%.

Portfolio size, dividends and tax at a 4% yield

2026/27. The 4% yield is only an assumption for the example; your own dividends are what count.

When dividends start to be taxed

At a 4% yield, a portfolio of about £12,500 pays £500 a year, the whole allowance. Above that, a basic-rate taxpayer pays 10.75p on each extra pound of dividends and a higher-rate taxpayer 35.75p.

Moving holdings into an ISA each year

A higher-rate taxpayer on £60,000 with £100,000 invested outside an ISA pays £1,251.25 on £4,000 of dividends. Moving £20,000 of those holdings into a Stocks and Shares ISA (the yearly subscription limit) takes £800 of dividends out of tax and cuts the bill to £965.25. Selling to move the holdings is a disposal for Capital Gains Tax, so check the gain first.

Every figure here is worked out by the same code as the calculator, using 2026/27 rates unless another year is named. Estimates for planning, not tax advice.

Pitfalls with investment dividends

• Ignoring reinvested dividends. Dividends on accumulation units, and dividends a platform reinvests for you, are taxable in the year they are paid even though you never receive the cash.
• Using the ex-dividend date. A dividend is taxed in the tax year it is paid, which can be weeks after the ex-dividend date, so a dividend declared in March may fall in the next tax year.
• Netting off foreign tax. Foreign dividends go in at the amount before foreign tax. Tax taken abroad is dealt with separately through Foreign Tax Credit Relief, up to the treaty rate.
• Forgetting jointly held accounts. Each owner is taxed on their own share of the dividends, and each has their own £500 allowance.