How much do you need to invest to live off dividends?
Work out the pot required for a £1,000-a-month income — or any target — at any yield, and how long your contributions would take to build it. ISA and taxed-account treatment built in. Ad-free, no sign-up.
To earn £1,000 a month — £12,000 a year — from dividends held in an ISA, you’d need roughly £240,000 invested at a 5% yield, about £300,000 at 4%, or around £171,000 at 7%. A higher assumed yield needs a smaller pot but usually carries more risk. Enter your own target below to see the pot required across a range of yields.
Adding £500/month at 5% growth, you’d reach £240,000 in about 20 years.
| Yield | Pot needed |
|---|---|
| 3% | £400,000 |
| 4% | £300,000 |
| 5% | £240,000 |
| 6% | £200,000 |
| 7% | £171,429 |
Yields are your assumption, not a promise — dividends can be cut, raised or cancelled.
Estimate only · yields are your assumption, not a forecast · 2026/27 tax rates
How the figure is worked out
The pot you need is simply your target annual income divided by the yield — £12,000 a year at 5% is £240,000. In a general account the calculator grosses the figure up so that, after the £500 allowance and your dividend rate, you’re still left with the income you asked for. The optional section grows a starting pot and monthly contribution at an assumed rate to estimate how long reaching the target would take. It is arithmetic on your assumptions, not a forecast or a recommendation.
How much do you need invested to live off dividends in the UK?
It depends on the income you want and the yield you assume. As a rule of thumb, divide your target annual income by the yield: £30,000 a year at a 5% yield needs a £600,000 pot; at 4% it needs £750,000; at 6% about £500,000. Held in a general account rather than an ISA, you need a larger pot again to cover the dividend tax. The calculator works out the figure for your own target and yield.
How big an ISA do you need for £1,000 a month in dividends?
£1,000 a month is £12,000 a year. In a stocks and shares ISA — where dividends are tax-free — that needs roughly £240,000 at a 5% yield, £300,000 at 4%, or about £171,000 at 7%. A higher assumed yield needs a smaller pot but usually carries more risk. The calculator shows the pot required across a range of yields so you can see the trade-off.
Is living off dividends realistic in the UK?
That is a personal judgement this tool can't make for you — it only does the arithmetic. What it can show is the size of pot different income targets and yields imply, and how long a given monthly contribution would take to build it. Whether a yield is achievable or sustainable, and whether the approach suits your circumstances, are questions for your own research or a qualified adviser.
Is dividend income taxed?
Inside a stocks and shares ISA or a pension, no — dividends are free of UK tax. In a general (taxable) account, the first £500 each year is covered by the dividend allowance and the rest is taxed at your dividend rate (10.75%, 35.75% or 39.35% for 2026/27). Switch the account setting in the calculator to see how much larger a taxed pot needs to be to deliver the same spendable income.
- Dividend reinvestment (DRIP) calculator — how reinvesting builds the pot faster.
- Dividend tax calculator 2026/27 — the tax on dividends held outside a shelter.
- UK dividend tax guide — the allowance, rates and bands explained.
This calculator gives a general estimate based on the assumptions you enter and is not financial or tax advice. It does not judge whether a yield is achievable or sustainable, assumes UK-wide dividend rates and that any taxed dividends fall in the band you select. Do your own research or speak to a qualified adviser before acting.
← All dividend tools