This calculator will work out your dividend tax liability for the 2021/22 tax year.
- Use the 2020/21 dividend calculator here.
- Use the 2022/23 dividend calculator here.
- Please scroll down the page for our notes and assumptions.
- Read this handy guide – what are dividends are how are they taxed?
2021-22 Salary & Dividend Tax Calculator
Protection for Limited Company Directors
- Protect your contract income if you can’t work – pay via your company!
- Life insurance – save up to 50% – your ltd company pays the premiums
Calculator scope
To keep the calculations as simple as possible, you can only enter salary and dividend amounts, and no further sources of income. If you do have other income streams, such as rental or investment income, let your accountant know, and they should be able to provide a personalised tax illustration.
Current Dividend Tax Bands
The dividend tax rates for 2021/22 tax year are: 7.5% (basic), 32.5% (higher) and 38.1% (additional). See the table below.
| Tax Band | 2021/22 Income | Tax Rate |
|---|---|---|
| Basic | £0 – £37,700 | 7.5% |
| Higher | £37,701 – £150,000 | 32.5% |
| Additional | £150,000 + | 38.1% |
Personal Allowance
The Personal Allowance for 21/22 is £12,570 (tax code is 1257L). We have used this code in our calculations
If your income is greater than £100,000, your personal allowance benefit is cut by £1 for every £2 you earn above the threshold. So, at a personal income level of £125,140, your entire personal allowance would have been removed.
Optimal salary for 2021/22
For most limited company owners, the optimal salary for this tax year is £8,840. If your company is able to claim the Employment Allowance, then this rises to £12,570.
Dividend Allowance
You do not pay any tax on your first £2,000 of dividends, courtesy of the dividend allowance. This is displayed in the ‘total taxable income’ cell above.
Confusingly, the dividend allowance sits within your existing income tax bands when it comes to working out your overall tax liability. We often get emails about this!
Employment Allowance
Most small company owners cannot claim the employment allowance, so it has been excluded from the calculation. Sole director companies, and those caught by IR35, for example, are ineligible. If your company is eligible, you can reclaim the Employers’ NIC sum listed in the calculation.
Further Notes
This dividend calculator was kindly created by our accountant for us to share with our users. Although we have taken great care to check all of the calculations, please make sure you talk to your own accountant before you make any financial decisions based on our calculator results.
Different income tax rates apply in Scotland. Our calculator uses the standard England & Wales income tax rates.
Try our April 2022 Dividend Tax + NIC increase calculator to see how much it will cost you.