Tax on dividends
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1. Check if you have to pay tax on dividends
You may get a dividend payment if you own shares in a company.听
You can earn some dividend income each year without paying tax.
This guide is also available in Welsh (Cymraeg).
How dividends are taxed
You do not pay tax on any dividend income that falls within your Personal Allowance (the amount of income you can earn each year without paying tax).听
You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend allowance.听
You do not pay tax on dividends from shares in an鈥�ISA.
Dividend allowance
| Tax year | Dividend allowance |
|---|---|
| 6 April 2024 to 5 April 2025 | 拢500 |
| 6 April 2023 to 5 April 2024 | 拢1,000 |
| 6 April 2022 to 5 April 2023 | 拢2,000 |
| 6 April 2021 to 5 April 2022 | 拢2,000 |
How much tax you pay
How much tax you pay on dividends above the dividend allowance depends on your Income Tax band.
| Tax band | Tax rate on dividends over the allowance |
|---|---|
| Basic rate | 8.75% |
| Higher rate | 33.75% |
| Additional rate | 39.35% |
To work out your tax band, add your total dividend income to your other income. You may pay tax at more than one rate.
You may be able to get an estimate of how much tax you have to pay on dividends you receive.
Example
You get 拢3,000 in dividends and earn 拢29,570 in wages in the 2024 to 2025 tax year.鈥�
This gives you a total income of 拢32,570.鈥�
You have a Personal Allowance of 拢12,570. Take this off your total income to leave a taxable income of 拢20,000.鈥�
This is in the basic rate tax band, so you would pay:鈥�
- 20% tax on 拢17,000 of wages鈥�
- no tax on 拢500 of dividends, because of the dividend allowance
- 8.75% tax on 拢2,500 of dividends
Check if you need to tell HMRC听
If you have dividend payments over both your unused Personal Allowance and dividend allowance, you need to report these to HM Revenue and Customs (HMRC).
2. How to report tax on dividends
You must tell HM Revenue and Customs (HMRC) every year you receive dividends that you have tax to pay on.听
How you report dividends to HMRC depends on how much you received.
Report tax on dividend income up to 拢10,000听
If you send a Self Assessment tax return, you must report any dividend income on your tax return. You must do this by the deadline.听
If you do not send a Self Assessment tax return, you must let HMRC know after the end of the tax year (5 April) and before 5 October. You can do this by either:
- 补蝉办颈苍驳鈥�HMRC鈥痶辞鈥�update your tax code鈥�- the tax will be taken from your wages or pension
- contacting the helpline鈥�
You do not need to tell HMRC if your dividends are within the dividend allowance for the tax year.
Report tax on dividend income over 拢10,000听
You鈥檒l need to fill in a鈥�Self Assessment tax return.鈥�
If you do not usually send a tax return, you need to by 5 October after the end of the tax year (5 April) in which you received the income.