Dividend tax: what you will owe and when
Dividend tax owed and payments on account - explained
Dividend tax is calculated in your Self Assessment return for the tax year the dividends were paid. The amount of this tax payable depends on your total income for that year.
A worked example
Director salary: £12,570. Dividends: £30,000. Total income: £42,570. Income Tax on salary: nil (within personal allowance). Dividend allowance: first £500 at 0%. Remaining dividends: £29,500 at 10.75% = £3,171.25. Total personal tax bill: £3,171.25, payable by 31 January.
Payments on account
If your Self Assessment bill exceeds £1,000, HMRC also requires two advance payments for the following year: 50% of this year's bill due 31 January, and 50% more due 31 July. These are payments towards next year's expected bill. Where your plan includes Self Assessment returns, or you add this on, we calculate these when preparing your return and advise you of the total amounts due on each date.
💡 Important: In your first year of significant dividends, the January payment can be surprisingly large because it includes both the current year bill and the first payment on account for next year. Plan for this. We advise of the expected total well in advance, so it is not a shock.
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