What is the dividend allowance in 2024/25?

The dividend allowance is £500 in 2024/25 (reduced from £1,000 in 2023/24 and £2,000 previously). Dividends up to £500 are tax-free.

Why do company directors pay dividends?

Directors typically take a small salary (around £12,570) and top up with dividends. Dividends avoid NI contributions and attract lower tax rates than salary.

Are dividends included in tax band calculations?

Yes. Dividends are added to your other income to determine which band they fall in, but dividend tax rates are lower than income tax rates at each level.

UK Dividend Tax Calculator 2024/25

Calculate tax on UK dividends. Annual dividend allowance £500 (2024/25). Basic rate 8.75%, higher rate 33.75%, additional rate 39.35%. Ideal for company directors.

Use the full interactive calculator below, or

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Frequently Asked Questions

What is the dividend allowance in 2024/25?

Why do company directors pay dividends?

Are dividends included in tax band calculations?