Dividend Tax Calculator

Calculate your 2024/25 net income using our free take home pay calculator

When you are contracting through your own limited company its hard to know exactly what your take home pay will be. There are several different types to taxes to factor in such as tax on dividends, PAYE, NIC, and there are various ways to extract funds from your limited company. Our dividend tax calculator helps you understand how much dividend tax you will need to pay.

Our dividend tax calculator includes the latest tax rates for the 2024/25 tax year including the dividend allowance. This calculator makes a series of assumptions in line with how the vast majority of our clients work, and it will provide you with a great initial idea of the pay you can expect. It’s completely free. Additionally, dividends are a tax-efficient investment as you do not need to pay national insurance on them.

Once you have input all the relevant information, we will give you an estimate of your new income using our take home pay calculator. This is a great way to get an idea of what to expect when working through your own limited company over a tax year. We have also prepared some background information for you on how dividends are taxed, including the tax free allowances available.

Still have questions about how contracting through a limited company will work for you? We are always happy to talk!

    Dividend Tax Calculator

    Three Ways to Reduce your Income Tax

    There are three main elements that affect the tax you pay as a limited company contractor. With good advice and accounting support, you can work in the most tax efficient way that complies with HMRC rules while maximising your net income. Understanding your Personal Allowance is crucial in optimizing your income and minimizing tax liabilities.


    The amount of expenses you claim through your business will impact your calculated take home pay. The more expenses your business has to pay for, the less pay that is available to you. If you are new to contracting there may be some expenses that you pay yourself, that could be paid by your business.

    These tax deductible business expenses are an excellent way of reducing your tax, and while they also reduce your take home pay, overall it can be beneficial for you. There will also be a range of other business expenses that you will need to allow for such as bank fees, accountants fees, contractor insurance costs (if you need insurance), and office running costs.

    Salary / Dividend Tax Rates

    Most clients will pay themselves a mix of both salary dividend and dividends from their limited company. These are both taxed at different amounts so it’s important to understand the tax rates for each to help you calculate your take home pay to ensure it suits your circumstances.

    Understanding dividend tax rates is crucial, as dividends are taxed at lower rates compared to standard income tax rates, and this interacts with Corporation Tax rates.

    Our accountants can help advise on the best way to set this up so that your income tax and corporation tax are minimised while also taking into account employers national insurance.

    Retained Earnings

    One of the major benefits of working through a ltd company is that you don’t have to extract all the funds you earn. You can choose to keep a portion of this funds in your company bank account. This is surplus of funds is called your Retained Earnings.

    It can be useful to keep these funds behind for periods when you are not working, so you can draw them down and continue to be able to meet your normal weekly living costs. And because these funds stay behind in your company they are not taxed like salary and dividends are, which can help reduce your overall tax liabilities.

    Furthermore, if you decide to finish your contracting business, these retained funds can be extracted from your business when you close it down in a far more tax efficient way than drawing as a salary or dividends.

    Still not sure? Pick up the phone, dial 020 7731 1117 or request a call-back here!

    Top 3 Things to Know About Take Home Pay

    When you work as a contractor, there are numerous factors that impact your net income, including how much income tax you need to pay. Our dividend calculator uses the most common settings used by the vast majority of our clients to give you a good initial idea of what you can expect to receive in the hand when working through your own company, along with your tax liability.

    You will also need to pay tax on any dividends you earn above the dividend allowance, which requires declaring earnings and filing a tax return.

    You will see other tax calculators that provide a vast array of further options and if you have specific calculation requirements, please feel free to contact our new business team. Our article here will also help which looks at comparing limited company vs umbrella take home pay.

    Working Inside IR35

    The terms ‘working inside IR35’, ‘within IR35’, or ‘caught by IR35’ all refer to the same thing. This is where your business income is taxed as if you were a full-time employee of your end clients business, and the term IR35 refers to tax avoidance legislation introduced in 2000.

    Working inside IR35 greatly reduces your net income because you no longer have the tax advantages outlined above, and there are very few expenses you can claim through your business. In most cases we recommend clients use an umbrella company if they are working inside IR35.

    No Worries offers its own umbrella company service called No Worries Red Umbrella, and its ideal for clients who are taking a break from their ltd company contracting to work on a contract that is caught by IR35. When you become an employee of our umbrella company your admin is vastly reduced, and its a very simple way to continue contracting. Find out more details of how you can work using our umbrella company here.

    Your profit margin

    If your company has a high profit margin, you will have a higher take home pay available to you. This is because there will be more money available to extract from your company. A high profit margin results from maximising your income (influenced by the invoices you send to your agency / end client, and your hourly or daily rate) and minimising your business expenses. Your profit margin (along with your taxable profits) will help determine how much tax you will pay.

    Business Expenses

    It goes without saying that an increase in business expenses will reduce your available net pay, but there are several business expenses you should consider that could be the best use of funds overall.

    One example is Pension contributions. These are 100% tax deductible for your business and are free of any national insurance obligations, and go straight into your personal pension pot.

    You may also be professional membership fees, various industry publications and newsletters, and training events that your company can now pay for. Although this does reduce your available take home pay, it also reduces your corporation tax and may be the best result for you overall.

    Still not sure? Pick up the phone, dial 020 7731 1117 or request a call-back here!