Dividend tax calculator

Dividends are the top slice of your income. Any Personal Allowance left after your salary and other income covers dividends first, then the £500 allowance applies. The allowance still uses up part of your basic rate band, which can push later dividends into the higher rate.

Many directors of their own limited company take a small salary and the rest as dividends. A salary up to £12,570 uses the Personal Allowance with no employee National Insurance, as the primary threshold is also £12,570. Employer National Insurance is 15% on salary above £5,000, which a company can offset with the £10,500 Employment Allowance unless the director is its only employee. Dividends are paid from profits after corporation tax, so the best split depends on your company's profits and whether it can claim the allowance. The table above shows personal tax only.

Dividends are taxed at UK rates and bands everywhere in the UK. A Scottish taxpayer's salary is taxed at Scottish rates, while their dividends use the UK basic rate band up to £50,270 of total income. The calculator handles both automatically when you choose Scotland.

Shares held in a Stocks and Shares ISA or a pension pay no dividend tax at all. Transferring shares to a spouse or civil partner with an unused allowance or a lower tax band is usually free of capital gains tax. Dividends above £10,000 a year must be reported through Self Assessment; below that, HMRC can collect the tax through your tax code if you tell it.