Salary and Dividend Tax Calculator

Find out how much you’ll take home this tax year

Use our salary & dividend tax calculator to find out how much tax you will pay and your take home pay based on your salary and annual dividend payments

If you’re self-employed and operating as a limited company you should already be familiar with the greater control, flexibility and tax-efficiency presented by structuring your remuneration through a combination of dividend payments and director’s salary.

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Calculate Your Take Home Pay

Your Total Income-
Your Total Taxable Income-
Tax on salary-
Employees NIC (paid by you)-
Extra tax to pay on dividends-
Employers NIC (paid by company)-
Total tax + NICs-
Your take home pay-

If you’re self-employed and operating as a limited company you should already be familiar with the greater control, flexibility and tax-efficiency presented by structuring your remuneration through a combination of dividend payments and director’s salary.

  • The UK’s Most Trusted Accountancy Firm
  • FreeAgent Accountancy Software
  • Your Own Dedicated Accountant
  • Guaranteed Same Day Response
  • Unlimited Support & Advice
  • Transparent, fixed monthly fee

Dividends are usually distributed quarterly but as a contractor operating as a limited company, you have flexibility and can pay yourself dividends annually, twice per year, monthly or whenever your company has surplus funds available.

In addition to the £12,570 tax-free personal allowance, it’s important to note that you don’t pay any dividend tax on the first £500 you receive in dividends, no matter how much other income you receive. This means you can receive £13,070 dividend income tax-free this tax year, providing you have no other taxable income.

If your salary is between £12,570 and £50,270 it will be taxed at 20% and an 8% national insurance contribution is levied against it. That’s 28% tax against salaried earnings; a significantly higher tax rate than you’d pay against dividends in the basic rate band.

No tax has to be paid on dividends from shares held in an ISA, and your dividend allowance is unaffected. Up to £20,000 can be saved in stocks & shares ISAs in the 24/25 tax year with no tax liability. Furthermore, capital gains tax isn’t payable against any profits from investments in your stocks & shares ISAs.

Our combined salary tax calculator and dividend tax calculator enables you to easily calculate how much income tax and tax on dividends you will pay based on your current salary, and the annual dividend payments you receive to work out your take home pay. Simply enter your gross salary and the amount of dividends you’ll receive this tax year.

Contact us today if you need expert advice on improving your tax-efficiency, company incorporation or self-assessment tax returns.

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How Dividends work

Dividends are a portion of company profit that is paid to shareholders in exchange for their investment in the business. Various factors affect the dividend amount such as the amount of surplus income the company has available and the percentage of shareholdings the shareholder has.

Dividends are calculated by distributing the profits a company has made after corporation tax has been levied at a rate between 19% – 25% depending on your corporation tax band. In most cases dividends are taxed after other income sources have already been taxed.

Unlike with salaries and wages, dividend income is not taxed at source via Pay As You Earn (PAYE). Recipients are responsible for declaring their dividend income to HMRC by completing a self-assessment tax return at the end of each tax year.

Calculating tax on dividends works more or less in the same way as the tax on any other income. The essential distinction is the dividend tax rates which are lower than income tax rates. For the 2024/25 financial year (6th April 2024 – 5th April 2025), income from dividends is taxed as follows:

  • £0 – £12,570 | 0% (Personal Allowance)
  • £12,571 – £50,270 | 8.75% (Basic Rate)
  • £50,271 – £125,140 | 33.75% (Higher Rate)
  • Over £125,140  | 39.35% (Additional Rate)
Dividends and the Dividend Allowance Explained

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Many contractors will stay with their current accountant even if they aren’t receiving the service they deserve. Perhaps they are over-paying or struggling with slow response times to queries. Appointing an accountant that you can trust gives you peace of mind that your accounting and tax obligations are in order allowing you to fully focus on your business.

Switching to Gorilla is easy! Our efficient, streamlined switching and onboarding process means we’ll have you set up and benefitting from our service in no time. We’ll take care of everything for you and can even contact your previous accountant for you to obtain the accounting records and information required.

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*The information presented by the contractor tax calculator is for illustrative purposes only and merely produces a generic guide to your expected take home pay based on the information provided. Gorilla Accounting will accept no liability for any loss suffered for any reliance placed on the above.

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