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Dividend tax calculator

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Quickly calculate the tax you need to pay on dividends you received from investments. And if you're a company director, see the best way to pay yourself (dividends or salary.
How did you earn dividends?
Dividends earned
£
Other income
£
Your additional income affects the tax you pay on fividends (e.g salary)
Select tax year
Taxable dividends breakdown
Dividends after tax
£2,925
Tax
£75
Dividends after tax
£2,925

Your first £2,000 from dividends is tax-free

Dividend Tax
£75

£1,000 of your dividends will be taxed at 7.5%: £75

Either try calling HMRC on 0300 200 3300 so they can simply take this tax from your salary or pension, or include it in your Self Assessment tax return.

How your dividend tax is calculated

Tax on dividends is calculated pretty much the same way as tax on any other income.

The biggest difference is the tax rates – instead of the usual 20%, 40%, 45% (depending on your tax band), you’ll be taxed at 7.5%, 32.5%, and 38.1%.

The numbers look strange but the reason is simple: the company paying you those dividends already paid corporate tax, so in the end it should work out to a similar tax rate.

This is mostly relevant if you own your company and trying to decide what is the best way to pay yourself: dividends or salary. Keep in mind that for salary you also need to pay National Insurance.

In your case you earned £3,000 in dividends and £29,000 in other income (this can be salary, rent, etc.).

Income Tax

You don’t pay income tax on the first £12,500 that you make in other income (this excludes dividends).

You pay 20% on the first £16,500 after the personal allowance.

Dividend Tax

You don’t pay any dividend tax on the first £2,000 you make in dividends.

You pay 7.5% on the next £1,000

Call HMRC on 0300 200 3300 so they can change your tax code – you’ll pay the dividend tax through your salary or pension.

If you normally file a tax return, you can also pay dividend tax through it.

Common questions

You’re not alone. If you’ve got a question about tax we’ve probably heard it before and have an answer, or we can walk you through what to do.

More self-service guides and FAQs

Most people do not need to file a Self Assessment because they are taxed at source. But there are a few reasons you may need to complete a tax return:

  • you’re self-employed and earned more than £1,000
  • you are a landlord with rental income over £2,500
  • you made over £12,000 in profit from investments
  • you received more than £10,000 from savings interest or dividends
  • you have foreign income
  • you want to claim a tax refund (CIS, EIS, SEIS, donations)
  • HMRC tells you to submit one
  • your income is over £100,000
  • you live abroad and had income from the UK
  • you’re in a partnership
  • you are a minister of any religion

Check out more reasons you may need to submit a Self Assessment

When it comes to Self Assessment mistakes, we’ve seen them all. Here are a few you’ll want to avoid:

  • Not knowing deadlines and key dates
  • Forgetting about tax reliefs you can claim
  • Forgetting about Payment on Account
  • Getting your tax code wrong
  • Not including total income and benefits from PAYE

Read more about these and other mistakes you can avoid

 

The UK tax year for individuals starts April 6th and ends April 5th of the following year. From then, you have until January 31st to complete your online tax return for the previous tax year.

More on tax dates can be found here

If you’re a company director, you’re probably wondering which option is better: paying yourself a salary or dividends.

The best solution is to pay yourself a minimum salary so you qualify for National Insurance credits, and the rest as dividends.

This is because for salary you’ll have to pay both the employee’s (yours) and the employer’s (your own company) NI contributions.

When you pay yourself dividends, you get an additional tax-free dividend allowance (£2,000) plus you’re exempt from additional NI contributions.

ISAs stand for Individual Savings Accounts. They’re meant to encourage people to save more.

How they work:

  • any gain you get from an ISA is completely tax-free: dividends, profits from shares, ETFs, interest, etc
  • you can only contribute up to £20,000 per year into all your ISAs combined
  • you can also only contribute into one of the each kinds of ISA per year – so if you have a Stocks&Shares ISA, you either continue paying into it this year, or transfer to a different provider (but only once per year)

Need help paying tax on your dividends?

Figuring out how much tax you owe on your dividends is hard.

Filing a personal tax return without making a mistake is even harder.

At TaxScouts, we do it for you online, fast, and for just £119, all in.

How it works

1. Answer a few simple questions

And we mean a few. After a couple of minutes of answering questions online we’ll have everything we need to start working on your tax return.

2. Then get paired with a tax accountant

That’s right, you’ll be matched with a real accountant who is best suited to prepare your return. Plus, they’re on hand for questions whenever you need.

3. We file your Self Assessment for you

Once you’ve signed off your return, your TaxScouts accountant will file your return online with HMRC. That’s it! We told you it was simple.