UK Dividend Tax Calculator
Calculate UK dividend tax for 2024/25. Includes the £500 allowance, basic (8.75%), higher (33.75%), and additional (39.35%) rates.
£
Quick:
£
Personal allowance: £12,570 in 2024/25
£13,285
Dividend Tax
26.6%
Effective Div Rate
£49,500
Taxable Dividends
£36,715
Take-Home (from divs)
Dividend Tax Breakdown
| Band | Rate | Taxable Dividends | Tax |
|---|---|---|---|
| Total Dividend Tax | £13,285 | ||
How UK Dividend Tax Works (2024/25)
Dividends are taxed after your other income. First, your personal allowance (£12,570) and salary fill up the lower bands. Then dividends are added on top, but with the £500 dividend allowance deducted first.
2024/25 Dividend Tax Rates
Dividend Allowance: £500 (tax-free)
Basic rate band (up to £50,270 total income): 8.75%
Higher rate band (£50,271–£125,140): 33.75%
Additional rate band (above £125,140): 39.35%
Basic rate band (up to £50,270 total income): 8.75%
Higher rate band (£50,271–£125,140): 33.75%
Additional rate band (above £125,140): 39.35%
Example
Salary £12,570 + Dividends £50,000 (2024/25):
Total income = £62,570 | Other income uses PA = £12,570
Dividend allowance = £500 (tax-free)
Basic rate dividends: £50,270 - £12,570 - £500 = £37,200 × 8.75% = £3,255
Higher rate dividends: (£62,570 - £50,270) = £12,300 × 33.75% = £4,151
Total dividend tax = £7,406
Total income = £62,570 | Other income uses PA = £12,570
Dividend allowance = £500 (tax-free)
Basic rate dividends: £50,270 - £12,570 - £500 = £37,200 × 8.75% = £3,255
Higher rate dividends: (£62,570 - £50,270) = £12,300 × 33.75% = £4,151
Total dividend tax = £7,406
Extended
Salary vs Dividends Comparison for Directors
Compare taking income as salary vs dividends for limited company directors
Salary vs Dividends Strategy for Directors
Compare taking profits as a higher salary vs dividends for a limited company director.
£
£
Typically set at NI threshold to avoid NI
| Scenario | Route | Tax & NI | Take-Home |
|---|
Dividend route assumes corporation tax (19–25%) already paid before distributing dividends. Salary route includes employer NI (13.8%). Simplified estimate only.
Frequently Asked Questions
What is the dividend allowance?
The dividend allowance is £500 for 2024/25 (reduced from £1,000 in 2023/24 and £2,000 previously). You can receive this amount in dividends without paying dividend tax, regardless of your income tax band.
What are the dividend tax rates for 2024/25?
Dividend tax rates are: 8.75% for basic rate taxpayers (income £12,571–£50,270), 33.75% for higher rate (£50,271–£125,140), and 39.35% for additional rate taxpayers (above £125,140).
Why do director-shareholders pay themselves in dividends?
Company directors who are also shareholders often take a low salary (up to the National Insurance threshold) and top up with dividends. Dividends are not subject to NI contributions, creating significant tax savings compared to a salary-only approach.
Do dividends count toward the income tax thresholds?
Yes. Dividends are added to other income to determine your tax band. However, dividends are taxed last — your salary, pension, and other income are assessed first, then dividends fill up the remaining bands.
What is the optimal salary/dividend split for a director?
A common strategy is to pay a salary equal to the secondary NI threshold (£9,100 in 2024/25) or the primary threshold (£12,570) to avoid NI, while taking the remaining income as dividends. The optimal split depends on personal circumstances.