UK Dividend Tax Calculator (2025/26)
Estimate the personal tax on a salary-plus-dividends profile common to limited company directors. UK rates for the 2025/26 tax year.
Dividends are taxed after your salary uses up the personal allowance. The dividend allowance is £500 for 2025/26. Dividend rates are 8.75% (basic), 33.75% (higher), 39.35% (additional). This calculator assumes English/Welsh/Northern Irish bands; Scottish income tax bands differ for salary but not for dividends.
Excludes employee NI on salary (typically £0 at £12,570). Does not model student loan, child benefit clawback or pension contributions.
How dividend tax works for company directors
Most UK limited company directors pay themselves a small salary (often up to the £12,570 personal allowance) and take the rest of their remuneration as dividends. Dividends are paid out of post-Corporation-Tax profit, so the company has already paid 19–25% before the director sees a penny.
- Your salary uses up the personal allowance first.
- The first £500 of dividends is tax-free (the dividend allowance).
- Dividends above that are taxed at 8.75%, 33.75% or 39.35% depending on where they fall in the income tax bands.
- The basic-rate band ends at £50,270 of total income; the higher-rate band ends at £125,140 (where the additional rate begins). The personal allowance tapers by £1 for every £2 of income over £100,000.
Why most directors take ~£12,570 salary
A salary up to the personal allowance generates no income tax and (with the National Insurance secondary threshold currently above this) often little or no NI. The salary is a deductible expense for Corporation Tax, while dividends are not. For most owner-managed companies this combination is the most tax-efficient extraction route — but it's not universal, and pension contributions, partner income and IR35 status can change the maths.
This calculator is a sanity check, not tax advice. Dividend strategy interacts with Corporation Tax, pension contributions, student loans, child benefit, mortgage applications and personal cash flow. Speak to a UK chartered accountant before changing your salary or dividend pattern.
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Information on this page is general guidance for UK small businesses and is not financial, tax or legal advice. Tax rules, allowances and product terms change. Always check current information with HMRC, Companies House or a qualified professional before making decisions.