Precision Utility
Dividend Tax
Calculator
Dividend Allowance
£500
Tax Year
2025/26
Calculate your UK dividend tax for 2025/26. Enter your salary and dividend income to see how dividends are taxed on top of your other earnings. The calculator applies the £500 dividend allowance and shows tax at 8.75%, 33.75% and 39.35% across each band.
Your Income
Total Dividend Tax
£0
Salary Tax
£0
Net Income
£0
Effective Div Rate
0%
Total Tax
£0
Basic (8.75%)
£0
Higher (33.75%)
£0
Additional (39.35%)
£0
Allowance Used
£500
How the dividend tax calculator works
Enter your annual salary (non-dividend income) and your total dividend income. The calculator first works out income tax on your salary using standard HMRC bands, then stacks your dividends on top to determine which dividend tax band they fall into.
The £500 dividend allowance is automatically deducted. Dividends within this allowance are tax-free regardless of your income level. Any dividends above the allowance are taxed at 8.75% (basic), 33.75% (higher) or 39.35% (additional) depending on which band they fall into.
Your salary determines where your dividends start being taxed. If your salary already uses up the basic rate band (£12,571–£50,270), your dividends will be taxed at the higher rate from the first pound above the allowance.
What you need to know about dividend tax 2025/26
Dividend tax applies to income from shares in a company, including dividends from your own limited company. The rates are lower than income tax because company profits have already been subject to Corporation Tax. Here are the key rates:
- Dividend Allowance: £500 tax-free (reduced from £1,000 in 2023/24)
- Basic rate: 8.75% on dividends in the £12,571–£50,270 band
- Higher rate: 33.75% on dividends in the £50,271–£125,140 band
- Additional rate: 39.35% on dividends above £125,140
Salary vs dividends: For company directors, a low salary at the NI threshold (£12,570) plus dividends is often the most tax-efficient approach. Dividends are not subject to National Insurance, saving both employee NI (8%) and employer NI (15%).
For income tax on salary only, use our income tax calculator. For the latest dividend rates, see the official HMRC dividend tax page on GOV.UK.
Frequently asked questions
What is the dividend allowance for 2025/26?
The dividend allowance for 2025/26 is £500. The first £500 of dividend income is tax-free regardless of your tax band. It was reduced from £1,000 in 2023/24 and from £2,000 in 2022/23.
What are the dividend tax rates for 2025/26?
Basic rate 8.75%, higher rate 33.75%, additional rate 39.35%. These apply to dividends above the £500 allowance, depending on which income tax band the dividends fall into.
How are dividends taxed on top of my salary?
Dividends are stacked on top of your salary. Your salary uses up your personal allowance and basic rate band first. Dividends are then taxed at the dividend rate for whatever band they fall into.
Is it better to take a salary or dividends?
For company directors, a combination of low salary (around £12,570) plus dividends is often most tax-efficient. Dividends are not subject to National Insurance, saving both employee NI (8%) and employer NI (15%).
Do I pay National Insurance on dividends?
No. Dividends are not subject to National Insurance contributions. NI is only charged on employment or self-employment income. This is one of the key tax advantages of dividend income.
How does the dividend allowance work with the personal allowance?
They are separate. The personal allowance (£12,570) covers all income including salary. The dividend allowance (£500) is an additional tax-free amount that applies only to dividend income, on top of your personal allowance.