Calculate the amount of tax owed on dividends for the 2025/26 tax year.
April 2026 Dividend Tax Hike: Basic + Higher Rate bands to increase by 2p.
Useful calculators and guides
- 2024-25 Dividend Calculator
- 2023-24 Dividend Calculator
- How are dividends taxed?
- What is the most tax efficient salary for directors?
Scroll down the page for assumptions and tax tables.
Salary & Dividend Tax Calculator (2025-26)
Are you looking for a new accountant?
- SG Accounting – First 3 months at £59.50 pm, no catch-up fees
- Clever Accounts – IR35 FLEX – take on any contract you are offered
- Aardvark Accounting – All-inclusive – £89 per month, no catch-up fees
Tax-efficient protection for company directors
- Income protection insurance – Protect your contract income if you can’t work, paid via your company
- Relevant Life insurance – Life insurance that can save up to 50%, with premiums paid by your limited company
Dividend tax rates and bands for 2025/6
Dividend tax rates are the same as 2023/24 and 2024/25
| Band | 2024/25 and 2025/26 tax years | Rate |
|---|---|---|
| Basic | £0 to £37,700 | 8.75% |
| Higher | £37,701 to £125,140 | 33.75% |
| Additional | £125,140+ | 39.35% |
What is the £500 dividend allowance?
The first £500 of dividends are tax-free, courtesy of the dividend allowance. This remains unchanged from last year.
Confusingly, the allowance still consumes £500 of your income tax basic rate band.
This explains the ‘total taxable income’ and ‘total income’ rows in the calculator.
The allowance has decreased steadily over time, from £5,000 in 2016/17 to just £500 today.
How is your salary taxed in 2025/6?
Income Tax
- £0 – £12,570 – 0% tax-free Personal Allowance (applies to most people).
- £12,571 – £50,270 – 20% basic rate
- £50,271 – £125,140 – 40% higher rate
- over £125,140 – 45% additional rate
The £12,570 Personal Allowance is reduced by £1 for every £2 you earn over the £100,000 threshold.
Employees’ National Insurance Contributions (paid by you via payroll)
- £12,570 – £50,270 – 8%
- over £50,270 – 2%
Employers’ National Insurance Contributions (paid by your company)
- over £5,000 – 15%
- this is the only significant tax change this tax year. Previously, salaries over £9,100 were taxed at a rate of 13.8%.
What is the most tax-efficient salary for directors in 2025/26?
From a company tax perspective, the optimum salary for directors remains £12,570 during the 2025/26 tax year.
However, some directors may prefer a £6,500 salary, which still counts towards the State Pension and is slightly easier to administer from a paperwork perspective.
Read more in our optimum salary guide.
Assumptions and notes
To keep our calculations as straightforward as possible, we’ve made a few key assumptions:
- The tax rates and bands applied are specific to England & Wales and do not include Scotland.
- Only dividends and salary are included.
- If you have extra income from investments or rental properties, please ask your accountant for a personalised calculation.
- The calculator assumes you have a tax code of 1257L and qualify for the full £12,570 Personal Allowance.
- Most small limited companies do not qualify for the Employment Allowance to reclaim employers’ NICs, so we have excluded it. If your company is eligible, you can offset up to £10,500 in employers’ NICs during the 2025/26 tax year.
Our accountants have reviewed and verified our calculations. However, we recommend not relying solely on the information provided here. Please consult your accountant if you have any questions about salaries and dividends.