Dividend Yield Calculator United Kingdom 2026-27
Calculate UK dividend yield with GBP share price, cash dividends, dividend allowance context, annual income, and portfolio income planning.
Check what your shares are actually paying you.
UK Dividend Yield Notes
UK dividend yield planning usually focuses on cash income, the £500 dividend allowance, ISA or pension wrapper use, payout frequency, and whether the payout is sustainable.
There is no tax-credit step in the UK — dividends are paid net out of post-Corporation-Tax profits, and you simply pay dividend tax on anything above the allowance.
UK-specific treatment for dividend yield: figures are framed in pounds, with British household or business wording and the assumptions commonly seen in PAYE, HMRC, mortgage, pension, and consumer-credit contexts.
Watch for UK markers in the page copy and inputs: HMRC, PAYE, National Insurance, pension contributions, stamp duty land tax, miles, APR, part-exchange, council tax, VAT, and GBP-based totals.
The result should be read as a United Kingdom estimate, so compare it with UK provider quotes, HMRC or GOV.UK guidance, lender affordability rules, devolved-nation differences, or regulated advice where needed.
Gross yield shown; net yield depends on your dividend tax band.
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How dividend yield and UK dividend tax are calculated
Dividend yield formula
Dividend yield = (Annual dividend per share ÷ Share price) × 100. If a company pays 80p per share a year and the share price is £20, the yield is 4.0%. That is the gross yield, before any dividend tax.
How UK dividends are taxed
UK dividends are paid out of profits the company has already paid Corporation Tax on — 25% main rate, or 19% where profits are £50,000 or less — but none of that tax is passed on to you as a credit: the UK abolished dividend imputation on 6 April 2016. Instead, every taxpayer gets a £500 dividend allowance each year, and dividends above it are taxed at 10.75% (basic rate), 35.75% (higher rate) or 39.35% (additional rate) in 2026-27.
| Dividend income | Covered by allowance | Taxable dividends | Tax at 10.75% | Tax at 35.75% |
|---|---|---|---|---|
| £500 | £500 | £0 | £0 | £0 |
| £2,000 | £500 | £1,500 | £161 | £536 |
| £4,000 | £500 | £3,500 | £376 | £1,251 |
| £10,000 | £500 | £9,500 | £1,021 | £3,396 |
Net yield is the gross yield less the dividend tax you actually pay. Shares held inside a stocks and shares ISA or a pension (SIPP) attract no dividend tax at all, so gross and net yield are identical.
FTSE dividend yield examples and top-yielding sectors
Indicative yields for LSE-listed shares. Yields move inversely with share prices, so check a live quote before relying on any figure.
| Sector | Typical yield range | Tax treatment | Notes |
|---|---|---|---|
| Banks (HSBC, Lloyds, NatWest, Barclays) | 4.5–6.5% | Ordinary dividend | High payout ratios, buy-backs common, cut in downturns |
| Energy and miners (Shell, BP, Rio Tinto, Glencore) | 4–8% | Ordinary dividend | Commodity-price dependent, variable |
| Consumer staples (Unilever, Diageo, BAT) | 3–7% | Ordinary dividend | Steadier, defensive payouts |
| REITs (Segro, Landsec, British Land) | 4–6% | Property Income Distribution — 20% withheld at source | The dividend allowance does not apply to PIDs |
| Utilities and infrastructure (National Grid, SSE, Severn Trent) | 4–6% | Ordinary dividend | Regulated or contracted revenues |
| Growth shares (RELX, Sage, Experian) | 0.5–2.5% | Ordinary dividend | Earnings reinvested rather than paid out |
| FTSE 100 average | 3.5–4.5% | Ordinary dividend | Higher than the S&P 500 (about 1.3%) |
How the £500 dividend allowance and the dividend tax rates work
What the dividend allowance is
Every UK taxpayer — basic, higher and additional rate alike — gets a £500 dividend allowance for 2026-27. The first £500 of dividend income in the tax year is taxed at 0%. It is an allowance rather than a deduction: that £500 still uses up part of whichever band it falls in.
The dividend tax rates for 2026-27
Dividends above the allowance are taxed at 10.75% where they fall in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band. The basic and higher dividend rates each rose by 2 percentage points on 6 April 2026; the additional rate stayed at 39.35%. Dividends are treated as the top slice of your income, so your salary, pension and other income decide which rate applies.
Worked example
Take £4,000 of dividends. The first £500 is covered by the allowance, leaving £3,500 taxable. A basic-rate taxpayer pays £3,500 × 10.75% = £376. A higher-rate taxpayer pays £3,500 × 35.75% = £1,251. Held inside a stocks and shares ISA or a SIPP, the whole £4,000 is tax-free.
There is no tax credit to reclaim
The UK ended dividend imputation on 6 April 2016, so a UK dividend is simply cash — it is not grossed up and carries no credit. Someone with no taxable income does not receive a refund from HMRC on an ordinary dividend; they just pay no dividend tax on it. The one exception is a REIT Property Income Distribution, which has 20% income tax deducted at source and can be reclaimed by a non-taxpayer or paid gross inside an ISA or SIPP.
Dividend Reinvestment Plans — how compounding dividends works
What is a DRIP?
A Dividend Reinvestment Plan (DRIP) automatically uses your cash dividend to buy more shares in the same company, usually with a low or no dealing charge. Over time, more shares generate more dividends — classic compounding. Most UK brokers and share registrars offer one, and accumulation (Acc) units of a fund or tracker do the same job automatically.
DRIP vs taking the cash
Taking dividends as cash gives you immediate income. A DRIP grows your holding for little or no dealing cost. The right choice depends on whether you need income now or are still building the pot — many investors run a DRIP through the accumulation years and switch to cash dividends at retirement.
Tax on reinvested dividends
Reinvesting does not avoid dividend tax. Reinvested dividends are still dividend income in the tax year they are paid, so they use up your £500 dividend allowance and are taxed at your dividend rate above it. Each reinvested lot has its own base cost — the price paid for those shares — which matters for Capital Gains Tax when you sell, against the £3,000 annual exempt amount. Inside an ISA or a pension there is no dividend tax and no CGT, and nothing to report.
Tax treatment of dividends in the United Kingdom
Dividends are taxable income
All dividends — whether taken as cash or reinvested — are taxable income for the tax year in which they are paid. You report the cash amount you actually received: UK dividends are not grossed up and carry no credit. The £500 dividend allowance is applied first, and the balance is taxed at 10.75%, 35.75% or 39.35% depending on the band it falls in.
Dividends and National Insurance
No National Insurance is charged on dividends. NI applies to earnings — employment income and self-employed profits — not to investment income, so neither employee nor employer NI is due on a dividend. That difference is why many company directors take a small salary plus dividends. Income tax on the dividend still applies above the allowance.
How you report and pay it
If your dividends are within the £500 allowance there is nothing to tell HMRC. Above it, dividends up to £10,000 can be dealt with by asking HMRC to collect the tax through your PAYE tax code, or by including them in a Self Assessment return. Taxable dividends above £10,000 must go on a Self Assessment return — register by 5 October following the end of the tax year if you do not already file one.
Frequently asked Frequently asked questions
What is dividend yield?
Dividend yield is the annual dividend per share divided by the current share price, expressed as a percentage. A share paying 80p a year and trading at £20 has a 4% yield. Yield rises when the share price falls and falls when the share price rises.
How are UK dividends taxed in 2026-27?
Every UK taxpayer has a £500 dividend allowance, so the first £500 of dividend income each tax year is tax-free. Dividends above that are taxed at 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers and 39.35% for additional-rate taxpayers in 2026-27. Dividends are treated as the top slice of your income, so your other income decides which rate applies.
Do UK dividends come with a tax credit?
No. The UK abolished dividend imputation on 6 April 2016 — the old dividend tax credit went with it, replaced by the dividend allowance and the dividend tax rates. UK dividends are paid out of profits after Corporation Tax (25% main rate, 19% small profits rate) and carry no credit for you to reclaim.
Do you pay National Insurance on dividends?
No. Dividends are investment income rather than earnings, so no employee or employer National Insurance is charged on them. You pay only income tax on dividends above the £500 dividend allowance, normally through Self Assessment or an adjustment to your PAYE tax code.
Why does the UK have higher dividend yields than most markets?
The FTSE 100 is weighted towards mature, cash-generative sectors — banks, energy, miners, tobacco, utilities and insurers — that return a large share of earnings to shareholders. The index yields roughly 3.5–4.5%, against about 1.3% for the US S&P 500 and around 3% for Europe.
What is the difference between dividend yield and total return?
Dividend yield measures income only. Total return adds capital growth to the dividends. A growth share might yield 1% but deliver a 15% total return through a rising price, while a high-yield bank might yield 6% with a flat price for a 6% total return.
Where these figures come from
Dividend and tax figures on this page come from HMRC and GOV.UK — the dividend allowance and dividend tax rates, Corporation Tax rates, the Capital Gains Tax annual exempt amount, and the ISA allowance — with general consumer guidance from MoneyHelper.
- Dividend allowance (£500) & dividend tax rates (10.75% / 35.75% / 39.35%) — GOV.UK — Tax on dividends.
- Reporting dividend income to HMRC — GOV.UK — How to report tax on dividends.
- Corporation Tax (25% main rate, 19% small profits rate) — GOV.UK — Corporation Tax rates and reliefs.
- Capital Gains Tax annual exempt amount (£3,000) — GOV.UK — Capital Gains Tax allowances.
- ISA annual allowance (£20,000) — GOV.UK — Individual Savings Accounts (ISAs).
- Consumer money guidance — MoneyHelper — Savings.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.