UK Dividend Tax Calculator
Work out the tax on your dividends for 2025/26 — after the £500 allowance, at the correct band rates.
Your income
Many directors take a salary around the £12,570 personal allowance.
2025/26 dividend rates
Built for directors, contractors and investors
Dividends stack on top of your salary and are taxed in bands — get the exact figure for 2025/26 without the spreadsheet.
2025/26 rates
Applies the current 8.75%, 33.75%, and 39.35% dividend rates and the £500 dividend allowance, with the right band thresholds.
Salary stacking
Correctly stacks dividends on top of your salary so they are taxed in the right bands — the part most people get wrong by hand.
Allowances applied
Uses any unused personal allowance against dividends first (tax-free), then the £500 dividend allowance, before charging tax.
Net dividend figure
Shows your dividends after tax and the effective rate, so you know exactly what lands in your pocket.
Band-by-band view
See precisely how much of your dividend is taxed at each rate — invaluable for planning the optimal salary/dividend split.
100% private
All calculations run in your browser — your income figures never leave your device.
Who uses it
Company directors
Plan the most efficient salary-plus-dividend split for the year.
Contractors
Limited-company contractors estimating take-home from dividends.
Investors
Shareholders working out the tax on dividend income from a portfolio.
Self Assessment
Estimate the dividend tax due before the 31 January deadline.
Frequently Asked Questions
How is dividend tax calculated in the UK?
Dividends are taxed on top of your other income, after a tax-free dividend allowance (£500 for 2025/26). The rate depends on which income-tax band the dividends fall into once stacked on your salary: 8.75% in the basic-rate band, 33.75% in the higher-rate band, and 39.35% in the additional-rate band. Any dividends covered by your unused personal allowance are tax-free.
What is the dividend allowance for 2025/26?
The dividend allowance is £500 for the 2025/26 tax year, taxed at 0%. It has been cut sharply in recent years — from £2,000 down to £1,000, then £500 — so dividends above this small allowance are now taxed much sooner than they used to be. The allowance still uses up band space even though it is charged at 0%.
Why do company directors pay themselves in dividends?
Director-shareholders of limited companies often take a small salary (around the personal allowance or NI threshold) plus dividends, because dividends are not subject to National Insurance and are taxed at lower rates than salary. The trade-off is that dividends are paid from post-corporation-tax profit, so the overall efficiency depends on profit levels and current corporation tax rates — it is less clear-cut than it once was.
Are dividends taxed before or after my salary?
After. Your salary and other non-dividend income use up the personal allowance and the basic/higher-rate bands first; dividends then "stack" on top and are taxed at the dividend rate for whichever band they land in. This is why the same £20,000 of dividends can be taxed very differently depending on your salary.
Do I pay National Insurance on dividends?
No. Dividends are exempt from National Insurance — one of the main reasons they are popular with company directors. They are only subject to dividend tax. Your salary, by contrast, attracts both income tax and NI, which this calculator does not include (use the UK Income Tax Calculator for that).
How do I report and pay dividend tax?
If your dividends are within the £500 allowance, there is nothing to report. Above that, you usually report dividend income through Self Assessment and pay any tax due by 31 January following the tax year. If your only untaxed income is modest dividends, HMRC may instead collect the tax by adjusting your PAYE tax code. Keep dividend vouchers as records.
Understanding UK Dividend Tax
Dividend tax is how the UK taxes income from company shares — whether you own a few shares in a listed company or you are a director drawing profit from your own limited company. It works differently from income tax on a salary, with its own rates and a separate allowance, and understanding the mechanics is essential for anyone planning how to take money out of a business tax-efficiently.
How dividends are taxed
Dividends sit on top of all your other income. First, your salary and other earnings use up the personal allowance and fill the basic and higher-rate bands. Dividends are then taxed at dividend rates according to which band they fall into: 8.75% for any portion in the basic-rate band, 33.75% in the higher-rate band, and 39.35% in the additional-rate band. The first £500 of dividends (2025/26) is covered by the dividend allowance and taxed at 0% — though it still consumes band space.
The shrinking dividend allowance
The dividend allowance has been cut dramatically: £5,000 when introduced in 2016, down to £2,000, then £1,000, and now just £500. Each cut has pulled more small investors and directors into paying dividend tax. For a basic-rate taxpayer the change from a £2,000 to a £500 allowance means up to around £131 more tax a year; for higher-rate payers, considerably more. It makes using ISAs (where dividends are tax-free) more attractive than ever for share investors.
Why directors use salary plus dividends
Owner-directors of limited companies typically pay themselves a modest salary plus dividends. The salary — often set around the personal allowance or the NI threshold — is a deductible business expense and preserves entitlement to the state pension. Dividends are then drawn from post-tax profit. The appeal is that dividends carry no National Insurance and are taxed at lower headline rates than salary. However, because dividends come out of profit that has already paid corporation tax, the combined picture is more nuanced than the headline rates suggest, and the optimal split shifts with corporation-tax changes.
No National Insurance — the key difference
The single biggest distinction between dividends and salary is National Insurance. Salary attracts both income tax and employee (and employer) NI; dividends attract neither. This is why a director taking £50,000 as dividends keeps more than one taking £50,000 as salary — but it also means dividends build no NI contribution record, so a small salary at or above the Lower Earnings Limit is usually retained to protect state-pension and benefit entitlement.
Reporting and planning
Dividends within the £500 allowance need no reporting. Above it, you generally declare them through Self Assessment and pay by 31 January after the tax year, although HMRC can sometimes collect modest amounts through your tax code. Good planning means timing dividends across tax years to stay within lower bands where possible, making full use of ISA allowances for share investments, and modelling the salary/dividend mix each year. This calculator gives you the band-by-band breakdown that planning depends on — but for a tailored strategy, an accountant is well worth the fee.