UK Savings & Dividend Allowance Optimiser
The full UK 7-piece allowance stack on one page: personal allowance, starting rate for savings, personal savings allowance, and dividend allowance — applied across your non-savings income, savings interest, and dividends in the right order, with optimisation tips for ISAs, pensions, and partner shifting.
Salary, self-employed profits, pension, rental income.
Bank, building society, gilts, peer-to-peer. Exclude ISA interest.
Listed shares, OEICs, your own Ltd company. Exclude ISA dividends.
Personal Allowance applied
£12,570
Starting rate for savings
£0
Personal Savings Allowance
£1,000
(basic-rate band)
Dividend Allowance
£500
| Slice | Amount | Tax |
|---|---|---|
| Non-savings basic rate (20%) | £17,430 | £3,486.00 |
| Subtotal | £3,486.00 |
| Slice | Amount | Tax |
|---|---|---|
| Personal savings allowance (£1,000 @ 0%) | £1,000 | £0.00 |
| Savings basic rate (20%) | £500 | £100.00 |
| Subtotal | £100.00 |
| Slice | Amount | Tax |
|---|---|---|
| Dividend allowance (£500 @ 0%) | £500 | £0.00 |
| Dividend basic rate (10.75%) | £1,500 | £161.25 |
| Subtotal | £161.25 |
Total income
£33,500
Total tax
£3,747.25
Effective rate
11.19%
Take-home
£29,753
- Your non-savings income (£30,000) has fully consumed the £5,000 starting rate for savings band. To restore any of it you'd need to drop your taxable non-savings income below £17,570 (e.g. via pension contributions, salary sacrifice, or self-employment expenses).
- You have used all of your £1000 Personal Savings Allowance. Additional savings interest beyond this is taxed at your marginal savings rate (20%). Move new savings to a Cash ISA (£20,000/year cap) to avoid further tax.
- The dividend allowance only covers your first £500. The remaining £1,500 of dividends is taxable. Holding shares inside an ISA or pension wrapper makes future dividends tax-free, and a partner with spare allowance can hold high-yield dividend stocks instead of you.
- Of your £1,500 of interest, £100 ends up as tax. A Cash ISA would shelter all of it (subject to the £20,000 combined ISA limit per year).
- Your dividend tax of £161.25 is on top of corporation tax already paid by the company. A Stocks & Shares ISA shelters dividends entirely from the personal layer.
Scotland: the savings & dividend math above is the same for Scottish taxpayers (HMRC uses UK rates for these income types — SAIM1120). Only Scottish non-savings income uses Scottish bands; for that, see the regional income tax calculator.
How the seven allowances stack
- Personal Allowance — £12,570. Tapered above £100,000 total income (£1 lost per £2), gone at £125,140. Applies to non-savings → savings → dividends in that order.
- Starting rate for savings — £5,000 @ 0%. SAVINGS ONLY. Reduced £-for-£ by taxable non-savings income above PA. Gone once non-savings income exceeds £17,570.
- Personal Savings Allowance — £1,000 / £500 / £0. SAVINGS ONLY. Tier set by your highest band: BR taxpayer £1,000, HR £500, AR £0.
- Dividend Allowance — £500 @ 0%. DIVIDENDS ONLY. Same allowance regardless of band.
- Basic-rate band — £37,700. Non-savings 20%, savings 20%, dividends 8.75% (2025-26) / 10.75% (2026-27).
- Higher-rate band — up to £125,140. Non-savings 40%, savings 40%, dividends 33.75% (2025-26) / 35.75% (2026-27).
- Additional-rate band — over £125,140. Non-savings 45%, savings 45%, dividends 39.35% (both years — unchanged by Autumn Budget 2025).
Frequently asked questions
What is the starting rate for savings?
Section 12 of the Income Tax Act 2007 gives a £5,000 0% rate band that sits BETWEEN the personal allowance and the basic rate band — but only on savings interest. It is tapered £-for-£ by every pound of taxable non-savings income above the personal allowance, so once your salary, pension or self-employed profit exceeds £17,570 (PA + £5,000) the starting rate disappears completely. It is most useful for low-earners, retirees living off interest, and people on career breaks.
What is the Personal Savings Allowance?
The Personal Savings Allowance (PSA) is £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, and £0 for additional-rate taxpayers. It is a 0% rate band — your interest still uses up that band of taxable income, but you pay no tax on it. It applies to interest from banks, building societies, gilts and most savings accounts, but not to ISAs (which are already tax-free) or to dividends.
How is the Dividend Allowance different from these?
The Dividend Allowance is £500 (2024/25 onwards) and is also a 0% rate band — separate from the PSA, separate from the SRS. It applies to dividend income only and does not depend on your tax band. After the £500, dividends are taxed at 8.75% / 33.75% / 39.35% in 2025-26; from 6 April 2026 (2026-27) the basic and higher dividend rates rose 2pp to 10.75% / 35.75%, with the additional rate unchanged at 39.35%, per Autumn Budget 2025 (Finance (No.2) Bill 2024-26).
In what order are the allowances applied?
Section 16 of the Income Tax Act 2007 sets the order: non-savings income first (employment, SE, pension, rental), then savings interest, then dividends — each filling tax bands on top of the previous one. Within each column the allowances apply in their natural order: PA → SRS (savings only) → PSA (savings only) → Dividend Allowance (dividends only) → basic-rate band → higher-rate band → additional-rate band.
Does this work for Scottish taxpayers?
The savings and dividend math is the same — HMRC SAIM1120 confirms that savings and dividend income for Scottish taxpayers always uses UK rates, not Scottish bands. Only Scottish non-savings income (salary, pension, etc.) uses the Scottish starter / basic / intermediate / higher / top rates. This calculator's England/Wales/NI non-savings band math is therefore not accurate for Scottish residents on that part — see our Scottish income tax tools for that.
What's the £100k personal allowance trap?
Section 35 ITA 2007: above £100,000 of adjusted net income, your personal allowance is reduced by £1 for every £2 of income, vanishing at £125,140. Combined with 40% income tax, this creates a 60% effective marginal rate in the £100k–£125,140 band. A £5,000 pension contribution there saves £3,000 — not £2,000.