If you run a limited company and pay yourself in dividends, the tax can be confusing — it depends on your other income, a shrinking allowance, and three different rates. This table cuts through it: how much tax you'd pay on dividends from £5,000 to £100,000, taken on top of the typical £12,570 director's salary, for 2025/26.
- The first £500 of dividends is tax-free (the dividend allowance).
- Above that, dividends are taxed at 8.75% (basic), 33.75% (higher) and 39.35% (additional).
- The rate depends on your total income, not the dividends alone.
- This table assumes a £12,570 salary first, the usual director set-up.
Dividend tax by amount (on top of a £12,570 salary)
| Dividends drawn | Dividend tax | Net dividends |
|---|---|---|
| £5,000 | £394 | £4,606 |
| £10,000 | £831 | £9,169 |
| £15,000 | £1,269 | £13,731 |
| £20,000 | £1,706 | £18,294 |
| £30,000 | £2,581 | £27,419 |
| £40,000 | £3,906 | £36,094 |
| £50,000 | £7,281 | £42,719 |
| £60,000 | £10,656 | £49,344 |
| £80,000 | £17,406 | £62,594 |
| £100,000 | £24,156 | £75,844 |
Run your own salary-and-dividend mix through the salary vs dividend calculator.
How dividend tax works
Dividends are paid from company profit after corporation tax, then taxed again in your hands — but at lower rates than salary, and with no National Insurance. After the £500 allowance, the rate depends on which income tax band the dividends fall into once stacked on top of your other income:
- 8.75% while your total income is within the basic-rate band (up to £50,270).
- 33.75% in the higher-rate band (£50,270 to £125,140).
- 39.35% above £125,140.
That's why the tax in the table jumps sharply once dividends push total income past £50,270 — the rate nearly quadruples on the slice above it.
The dividend allowance has been slashed The tax-free dividend allowance is now just £500, down from £5,000 a few years ago. Almost all dividends are now taxable from the first few hundred pounds, so the old "take a bit of dividend tax-free" planning barely applies.
The two-tax catch
Remember dividends are taxed twice overall: the company pays corporation tax (19%–25%) on the profit first, then you pay dividend tax when you extract it. The corporation tax calculator covers the company side, and the sole trader vs limited comparison shows whether the whole structure beats self-employment for you.
Frequently asked questions
About £2,581 if taken on top of a £12,570 salary in 2025/26, leaving £27,419 net — most of it taxed at the 8.75% basic rate.
8.75% (basic), 33.75% (higher) and 39.35% (additional), after a £500 tax-free allowance.
No. Dividends are free of National Insurance, which is part of why a salary-plus-dividend split is tax-efficient for directors.
Once your total income passes £50,270, dividends above that are taxed at 33.75% instead of 8.75% — nearly four times the rate.
Yes, for 2025/26. It has fallen from £5,000, so nearly all dividends are now taxable.
Figures are 2025/26 estimates assuming a £12,570 salary and no other income. Take accountancy advice for your own profit-extraction plan.