Dividend Income Calculator
Calculate annual dividend income and project portfolio growth with or without reinvestment (DRIP).
Last updated: April 2026 · Source: GOV.UK
Annual Dividend Income
£4,000.00
£333.33/month
Portfolio in 10 Years
£198,932.45
Total dividends: £55,580.03
| Year | Dividend | Total Divs | Portfolio |
|---|---|---|---|
| 1 | £4,000.00 | £4,000.00 | £107,120.00 |
| 5 | £5,266.74 | £23,058.10 | £141,043.42 |
| 10 | £7,428.40 | £55,580.03 | £198,932.45 |
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
Dividend income from UK shares and funds is calculated by multiplying the number of shares held by the dividend per share, or by applying the portfolio's dividend yield to the total investment value. A portfolio worth £100,000 with a 4% yield produces £4,000 in annual dividends. Yields vary by sector: FTSE 100 companies typically yield 3.5-4.5%, while growth stocks may yield under 1% and high-yield investment trusts can exceed 6%.
The dividend allowance for 2025/26 is £500 — the first £500 of dividend income is tax-free regardless of your tax band. Above this, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate). These rates are lower than income tax on earnings because company profits have already been subject to corporation tax before being distributed as dividends.
The calculator stacks dividend income on top of other income to determine the correct tax band. If your salary is £45,000 and you receive £6,000 in dividends, the first £500 is tax-free, the next £5,270 (up to the £50,270 basic rate limit) is taxed at 8.75%, and the remaining £230 is taxed at 33.75%. Dividends within an ISA or pension are completely tax-free and do not count toward the allowance or tax bands.
Dividend tax on £8,000 annual dividends for a higher-rate taxpayer
- Portfolio value: £200,000 with 4% average yield = £8,000 dividends
- Salary: £60,000 (already in higher-rate band)
- Dividend allowance: £500 tax-free
- Taxable dividends: £8,000 - £500 = £7,500
- Tax at higher rate (33.75%): £7,500 x 33.75% = £2,531.25
Source: GOV.UK
Frequently Asked Questions
- What does the Dividend Income Calculator do?
- Calculate annual dividend income and project portfolio growth with or without reinvestment (DRIP). All calculations are performed in your browser using official UK rates and thresholds.
- Is this calculator suitable for financial decisions?
- This calculator provides estimates for guidance only. Investment returns are not guaranteed and your capital is at risk. Consider seeking independent financial advice before making investment decisions.
- Are ISA contributions tax-free?
- Yes. The annual ISA allowance for 2025/26 is £20,000. Any interest, dividends or capital gains within an ISA are completely tax-free.