Dividend tax due
£4,031
Effective rate on dividends: 10.1%
Dividend income
£40,000
Dividend tax
£4,031
Dividends after tax
£35,969
This is the personal tax on your dividends. It doesn’t include Income Tax or National Insurance on your salary, or the Corporation Tax the company already paid on its profits.
We’ll file your Self Assessment for a fixed £199 + VAT
Dividends, salary and other income reported correctly and filed with HMRC before the 31 January deadline.
How dividend tax works
Dividends are treated as the top slice of your income, so the rate you pay depends on how much other income (usually salary) you already have. For 2025/26:
- The first £500 of dividends is tax-free (the dividend allowance)
- 8.75% on dividends within the basic rate band (up to £50,270 total income)
- 33.75% on dividends in the higher rate band (£50,270 to £125,140)
- 39.35% on dividends in the additional rate band (over £125,140)
Worked example: a director on a £12,570 salary (covered by the personal allowance) taking £40,000 of dividends pays nothing on the first £500, 8.75% on the part within the basic rate band, and 33.75% on the roughly £2,300 that tips into the higher rate — about £4,031 in total.
An estimate — your return is where it's confirmed
This calculator uses 2025/26 rates and the £500 allowance, and dividend rates apply UK-wide (including Scotland). It doesn’t model every situation — other income, the £100,000 allowance taper, pension contributions and reliefs all affect the final figure. We prepare director Self Assessment returns for a fixed £199 + VAT. Call 0114 327 1480.