By GoForma — ACCA and AAT qualified accountants Last reviewed Uses HMRC 2025/26 rates
2025/26 Tax Year

Dividend Calculator (Excluding VAT)

Calculate the amount of dividends you could take when excluding VAT as UK Limited Company Director.

Use the calculator How it works
Trusted by UK founders since 2018
203 5-star reviews ACCA and AAT qualified Fixed monthly fees Free company switch

Key takeaways

  • The dividend allowance is £500 for 2025/26 — dividends up to this amount are tax-free regardless of which rate band you fall into.
  • Basic rate taxpayers pay 8.75% on dividends above the allowance. Higher rate payers pay 33.75% and additional rate payers pay 39.35%.
  • Dividends are taxed on top of your other income, so your salary determines which band your dividends fall into — not the dividends themselves in isolation.
  • Dividends can only be paid from retained profits after corporation tax. If the company has no distributable reserves, no dividend can legally be paid.
  • Dividend income is reported on Self Assessment. There is no PAYE deduction at source — tax is due by 31 January after the end of the tax year.
How it works

Three inputs, one clear answer

1

Enter your salary and dividends

Input your annual PAYE salary and the total dividends you plan to take so we can calculate your combined income.

2

Confirm your tax code

Check your personal allowance is correct. Enter any other income sources that affect which band your dividends fall into.

3

See your dividend tax bill

The calculator shows dividend tax at each rate band, the allowance used, and the total tax you owe on dividends for the year.

This calculator shows how much income tax you pay on dividends from a limited company for the 2025/26 tax year, including the dividend allowance and the interaction with your PAYE salary.

Dividend allowance 2025/26

The dividend allowance for 2025/26 is £500. Dividends below this are free of income tax at any rate band. It has been cut sharply from £5,000 in 2022/23 and is now at its lowest level in years.

Dividend tax rates 2025/26

Above the allowance, dividend tax rates are: 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate, over £125,140).

How salary affects dividend tax

Dividends are stacked on top of other income. If your salary takes you to the higher rate threshold (£50,270), all dividends are taxed at 33.75%. This is why directors combine salary and dividends carefully to stay in the basic rate band.

Declaring dividends correctly

Dividends require a board minute and a dividend voucher for each payment. They can only be paid from distributable profits. If there are no retained profits, a payment is an unlawful distribution.

Reporting dividends on Self Assessment

Dividend income is declared in your personal Self Assessment return. Tax is due by 31 January following the tax year. HMRC does not deduct dividend tax at source.

Who it's for

Made for UK self-employed workers

Limited company directors

Directors drawing a combination of salary and dividends who want to understand their income tax liability on dividends for 2025/26.

Learn more →

Shareholders receiving dividends

Shareholders in private or listed companies who receive dividend income and need to report it on Self Assessment.

Learn more →

Contractors going limited

Contractors setting up a limited company for the first time and planning their salary and dividend strategy for maximum efficiency.

Learn more →

Freelancers and consultants

Freelancers operating through a limited company who want to understand how much of their profit they can draw as dividends.

Learn more →
Questions answered

Frequently asked questions

What is the dividend allowance for 2025/26?

The dividend allowance is £500. Dividends up to this amount are tax-free regardless of your income tax band.

How much tax do I pay on dividends above the allowance?

Basic rate taxpayers pay 8.75%, higher rate taxpayers pay 33.75%, and additional rate taxpayers pay 39.35% on dividends above the £500 allowance.

How do dividends interact with salary for tax purposes?

Dividends are taxed on top of other income. Your salary determines which band your dividends fall into, so a high salary can push dividends into the higher rate.

When do I pay tax on dividends?

Dividend tax is paid through Self Assessment. The deadline is 31 January following the end of the tax year. HMRC does not deduct tax at source.

Can I pay dividends even if I make a loss this year?

Only from retained profits. If your company has no distributable reserves, you cannot legally pay a dividend regardless of what happens in the current year.

Get a free consultation with a qualified accountant

Fifteen minutes, no sales pitch. An ACCA or AAT qualified accountant will walk through your income, IR35 status and expenses and recommend the structure that actually maximises your take-home pay.

This calculator provides estimates for the 2025/26 UK tax year (England, Wales & Northern Ireland). Actual tax liability depends on your full circumstances. For tailored advice, with an ACCA or AAT qualified accountant.