Dividend Reinvestment (DRIP) Calculator — UK
See how reinvesting your dividends compounds a portfolio over time, compared with taking the cash — with UK ISA, pension and taxable-account treatment built in. Ad-free, no sign-up.
Reinvesting a dividend buys more shares, which pay more dividends, which buy more shares again. Over a long horizon that compounding can add a large amount to both the value of a holding and the income it throws off. Enter your figures below to project the two paths side by side — dividends reinvested versus taken as cash — and switch between a tax-free ISA/pension and a taxable account to see the difference tax makes.
Reinvesting rather than spending the dividends adds £22,790 over 20 years — the growth earned on dividends put back to work.
| Year | Value (reinvested) | Dividend that year | Value (cash taken) |
|---|---|---|---|
| 1 | £10,900 | £500 | £10,400 |
| 2 | £11,886 | £550 | £10,816 |
| 3 | £12,967 | £606 | £11,249 |
| 4 | £14,153 | £667 | £11,699 |
| 5 | £15,455 | £735 | £12,167 |
| 6 | £16,884 | £811 | £12,653 |
| 7 | £18,453 | £894 | £13,159 |
| 8 | £20,178 | £987 | £13,686 |
| 9 | £22,074 | £1,089 | £14,233 |
| 10 | £24,160 | £1,203 | £14,802 |
| 11 | £26,456 | £1,329 | £15,395 |
| 12 | £28,984 | £1,470 | £16,010 |
| 13 | £31,768 | £1,626 | £16,651 |
| 14 | £34,838 | £1,799 | £17,317 |
| 15 | £38,223 | £1,992 | £18,009 |
| 16 | £41,958 | £2,206 | £18,730 |
| 17 | £46,082 | £2,445 | £19,479 |
| 18 | £50,636 | £2,711 | £20,258 |
| 19 | £55,669 | £3,008 | £21,068 |
| 20 | £61,234 | £3,338 | £21,911 |
Estimate only · assumptions are your own inputs, not a forecast · 2026/27 tax rates
How the projection works
Each year the calculator pays a dividend on the shares you hold, grows the payout by your dividend-growth rate and the share price by your price-growth rate, and — in the reinvest path — buys more shares with the net dividend. In a taxable account it first applies the £500 dividend allowance and then the dividend rate for your tax band; in an ISA or pension, dividends are tax-free. It is arithmetic on the assumptions you enter, not a prediction: real dividends can be raised, cut or cancelled, and share prices fall as well as rise.
How does dividend reinvestment work?
Instead of taking a dividend as cash, you use it to buy more shares of the same company. Those extra shares then pay their own dividends, which buy more shares again — so both your holding and your income grow on top of each other. In the UK this happens either through a broker's DRIP service (it buys existing shares on the market with your cash dividend) or a company scrip scheme (it issues new shares in place of cash).
Is a DRIP worth it in the UK?
Reinvesting keeps every dividend working rather than sitting as cash, and over long periods the compounding can be substantial — the calculator shows the difference for your own figures. Whether it suits you depends on whether you need the income now and on dealing costs: some brokers reinvest for free, others charge per purchase, which eats into small dividends. This tool computes the arithmetic; it does not tell you what to do.
DRIP versus taking dividends as cash — what's the difference?
Taking the cash gives you income to spend but leaves your share count unchanged, so future dividends stay flat unless the company raises its payout. Reinvesting forgoes the income today to buy more shares, growing both the holding and the future income. The calculator runs both side by side so you can see the trade-off over your chosen time horizon.
Are reinvested dividends still taxed?
It depends on the account. Inside a stocks and shares ISA or a pension (SIPP), dividends are free of UK tax whether you reinvest them or not. In a general (taxable) account, reinvested dividends are taxed exactly like cash dividends — the reinvestment doesn't shelter them — using the £500 dividend allowance and then the dividend rate for your income-tax band. Switch the account setting in the calculator to see the effect.
What's the difference between a scrip dividend and a DRIP?
A scrip dividend issues brand-new shares straight from the company; a DRIP pays the cash dividend and your broker buys existing shares on the market. The end result feels similar — more shares instead of cash — but the costs, paperwork and tax basis differ. Our guide on scrip dividends versus DRIPs explains it in full.
- Scrip dividends vs DRIPs — how the two ways of turning a dividend into shares differ.
- Dividend tax calculator 2026/27 — the tax due on dividends held outside a shelter.
- UK dividend tax guide — the allowance, rates and bands explained.
This calculator gives a general projection based on the assumptions you enter and is not financial or tax advice. It assumes UK-wide dividend rates and that the dividends are your only ones for the year. Figures are estimates — check gov.uk or a qualified adviser before acting.
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