Dividend Tax Calculator-Rates & Allowances|DNS Accountants

by Vidit Agarwal Marketing Director

What Is Dividend Tax?

Dividend income received by an individual’s holding shares of a company is taxed by tax authority. Rules and regulations for tax on dividend were different before 6 April 2006.According to the new tax-free allowance, an individual only need to pay tax on dividend, if there dividend income is more than dividend allowance which is £5,000 for the year 2017/18.

DNS Dividend Tax Calculator 2017/18

The Dividend Tax Calculator will help you to calculate your tax liability on your dividend income and total personal tax. You just need to fill some details, annual gross salary and annual gross dividends and taxation year for which you need to calculate.

Working Out Dividend Tax for the year 2016/17

As per current dividend taxation system, how much tax you pay depends on which income tax band you’re in. You need to inform HMRC about how much income you have received as dividend income. You don’t need to pay dividend tax on the initial £5,000 of our dividend income. The amount of tax you pay on dividend income for year 2016/17 as follows:

If you fall under the basic-rate tax payer (income up to- £32,000), the tax rate on dividends above your allowance would be-7.5%
If you fall under the higher-rate tax payer (income-£32,001 to £150,000), the tax rate on dividends above your allowance would be-32.5%
If your income is above £150,000 you will fall under additional rate tax band, the tax rate on dividends above your allowance would be-38.1%

For example: if an individual receives dividend of £6,000 and has a non-dividend/taxable income of £15,000: the non-dividend income £15,000 is covered by the personal allowance of £11,000, the difference of £4000 is taxed at basic-rate (7.5%) and the dividend income of £6,000 is covered by the dividend allowance of £5,000 therefore, the difference of £1,000 is taxed at basic-rate.

Dividend Tax Allowance For The Following Tax Year

What is maximum dividend tax free? Dividend allowance was introduced in April 2016.Dividend allowance is expected to fall down to £2,000 for tax year 2018/19. The first £5,000 of dividend income is not liable for dividend tax, if you fall under dividend allowance you don’t need to pay any tax on dividend.

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