Limited company dividend tax calculator (24-25)

If you are a limited company director, you typically pay yourself a salary and draw down any retained profits as dividends.

Use this calculator to determine 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 24-25 tax year

Important notes

  • A Dividend Allowance applies to the first £500 of dividends. This is reflected in the calculator’s ‘Your Total Taxable Income’ cell.
  • The tax rates used in the calculator apply to England and Wales.
  • For simplicity, we have excluded the Employment Allowance from the calculator, as sole director companies are ineligible to claim it. 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 – collected via the PAYE payroll process.

The personal allowance for 2024/5 is £12,570. Assuming you can receive the total amount, no income tax is 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 – 8% 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 self-assessment.

Dividends – further considerations

You must only ever distribute dividends if sufficient retained profits exist in your company accounts. If you overpay dividends, they could be classified 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 you have any questions whatsoever, ask your accountant.

Tax-efficient protection for directors

  • limited company life cover