Dividend tax calculator

If you currently own or you’re thinking about investing in dividend stocks, you might be wondering whether you need to pay tax on this additional income. Use our calculator to find out whether you do – and how much you might owe.

Dividend tax calculator

Tax year 2024/2025 2023/2024 2022/2023

Gross salary

£

Dividends

£

Calculate

Fill in the fields above to calculate your dividend tax.

How does our calculator work?

1. Choose the tax year from the drop down list.

2. Enter your gross salary (salary before tax).

3. Enter how much you have earned or expect to earn from dividends in the tax year selected and press calculate.

What does the result mean?

Our calculator results show your total earnings and how much you’ve used of your dividend allowance up to the limit of £500.

It then gives a breakdown of how much of your dividend income is taxable in each income tax bracket, and how much tax you would need to pay at each rate.

You may pay tax on dividends at two different rates if the dividend income takes you into a new tax bracket. For example, if you earn £45,000 as your gross salary and £10,000, some of your dividend income will be taxable at a basic rate while some will be taxable at a higher rate. The calculator gives you a full breakdown of this.

What are dividends?

A dividend is a payment of company earnings made to people who own a share in that company. If you invest in dividend stocks, the size of the dividend you receive will depend on the number of shares you have and the company’s performance. Typically, dividends are calculated as a percentage of a company’s earnings, known as the dividend payout ratio.

What is the dividend allowance in the UK?

The annual dividend allowance is £500 for the 2024/2025 tax year. This means that you can earn up to £500 in dividend payouts without oweing tax, but everything above that will be taxed. You also won’t pay tax on any dividend income that falls within your personal allowance (£12,570 for the 2024/2025 tax year) when combined with your other income sources.

How much is tax on dividends in the UK?

The amount of tax you pay on dividend income above the allowance depends on your income tax bracket. If your dividend profits combined with your income from other sources takes you into a new tax bracket, this will impact how much tax you pay.

• Basic rate: 8.75%
• Higher rate: 33.75%
• Additional rate: 39.35%

What are the UK income tax brackets?

• Basic rate: Annual income of £12,571 to £50,270. You pay income tax of 20%.
• Higher rate: Annual income of £50,271 to £125,140. You pay income tax of 40%.
• Additional rate: Annual income from £125,141. You pay income tax of 45%.