Dividend Tax Calculator (UK 2024/25)
Salary, pension etc.
Dividend tax is paid on income received from company shares above the annual dividend allowance. The allowance was cut from £2,000 to £1,000 in 2023/24 and further to £500 in 2024/25. Dividends are taxed at lower rates than employment income but are not eligible for National Insurance relief.
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Tip: Director-shareholders often pay themselves a mix of salary (up to the NI primary threshold) and dividends to minimise overall tax. Consult an accountant for the optimal split.
- 1Dividend allowance 2024/25: £500 — dividends below this are tax-free
- 2Dividends are stacked on top of other income to determine which tax band applies
- 3Basic rate taxpayers pay 8.75% on dividends · Higher rate: 33.75% · Additional rate: 39.35%
- 4Dividends within an ISA or pension are completely tax-free
- 5Must be declared on Self Assessment even if below the allowance
£2,000 dividends, basic rate taxpayer=£131.25 tax(£2,000 − £500) × 8.75% = £131.25
£20,000 dividends, higher rate taxpayer=~£6,581 tax(£20,000 − £500) × 33.75% = £6,581.25
| Tax Band | Dividend Rate | Income Band |
|---|---|---|
| Basic rate | 8.75% | Up to £50,270 total income |
| Higher rate | 33.75% | £50,271 – £125,140 |
| Additional rate | 39.35% | Above £125,140 |
| Within ISA/pension | 0% | Always tax-free |
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