Limited company dividend tax calculator (23-24)

If you run your own limited company, you will typically pay yourself a salary and draw down any retained profits as dividends.

Use this calculator to work out how much tax you will incur on any combination of salary and dividends.

Scroll down for further advice on choosing the most tax-efficient salary, plus some explanatory notes.

Limited company dividend calculator for the 23-24 tax year

Important notes

• There is a Dividend Allowance that applies to the first £1,000 of dividend income. This is reflected in the ‘Your Total Taxable Income’ cell in the calculator.
• The tax rates used in the calculator apply to England and Wales.
• We have excluded the Employment Allowance from the calculator for simplicity, as sole director companies are ineligible to claim. You may be able to claim if you have 2+ employees (including directors).

How are salary and dividends taxed?

Salaries incur income tax, employers’ and employees’ NICs – which are all collected via the PAYE payroll process.

The personal allowance for 2023/4 is £12,570. Assuming you are eligible to receive the total amount, there is no income tax due on salaries paid up to this threshold.

Class 1 Employers’ NICs – 13.8% on income over £9,100 (Secondary Threshold).

Class 1 Employees’ NICs – 12% on income between £12,570 and £50,270, and 2% over £50,270.

Dividends incur dividend tax – which is levied according to the tax band you sit within. This is collected via the annual self-assessment process.

Dividends – further considerations

You must only ever distribute dividends if there are sufficient retained profits in your company accounts. If you overpay dividends they could potentially be classed as ‘ultra vires’ (illegal), incurring the wrath of both HMRC and your accountant.

Most businesses now use online accounting software, such as FreeAgent and Xero.

Assuming you have kept your accounts up-to-date, and reconciled with your bank account, you should have a precise indicator of the amount of dividends you can legitimately draw down from your company at any one time.

If in any doubt whatsoever, ask your accountant.

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