Work out the tax on dividend income and the net yield it leaves.
The allowance is deducted before the rate applies, so small dividend incomes may be taxed lightly or not at all. Net yield is the figure to compare against other income sources. Holding dividend payers inside a tax-sheltered account removes this drag entirely, which is usually worth more than chasing a slightly higher gross yield.
Dividend Tax Impact
Tax = (dividends − allowance) × dividend tax rate; net yield = net income ÷ portfolio value
Tax = (dividends − allowance) × dividend tax rate; net yield = net income ÷ portfolio value The allowance is deducted before the rate applies, so small dividend incomes may be taxed lightly or not at all. Net yield is the figure to compare against other income sources.
Holding dividend payers inside a tax-sheltered account removes this drag entirely, which is usually worth more than chasing a slightly higher gross yield.
This calculator takes 4 inputs: Annual dividend income, Dividend allowance, Dividend tax rate, Portfolio value. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.