Dividend Tax Calculator

This is the total amount of dividends you can receive in a tax year without paying any tax on them. You’re entitled to the dividend allowance even if you receive other types of income, and you can use it alongside the Personal Tax Allowance. Our tax rates article explains how the allowances work together in more detail.

You won’t need to pay any National Insurance on the dividend income you receive, so make sure you keep detailed records of what you earn, and where from!

No, the amount of tax you pay is based on how much you earn during the tax year. You’ll normally pay dividend tax by submitting a Self Assessment return after the tax year you’re reporting has ended.

That said, it’s usually better to take dividends at regular intervals rather than ad-hoc amounts at random points in the year.

No, you’ll only pay dividend tax on dividends you actually declare. Some people use this to take a tactical approach. For instance, if the company profits are £50,000 in Year 1, and £10,000 in Year 2, the total profits over two years are £60,000.

Rather than paying a large dividend one year and a small one the next, you might decide to declare dividends of £30,000 per year, and your income will be under the basic rate tax threshold.

Tax efficiency depends on how much you earn and how you earn it, so this answer can vary depending on your circumstances. If you’re currently operating as a sole trader and want to explore what incorporating a limited company will mean for your tax bill, take a look at our free online tax calculator.