The dividend allowance is the amount of tax-free dividends that you can earn in a tax year.
What you need to remember about the dividend allowance:
- you only pay tax on the amount of dividends that go above your dividend allowance in that tax year
- if you earned dividends under the allowance, you don’t need to do anything
- in the 2019/2020 tax year, the dividend allowance is £2,000
- dividends on any shares held in a Stocks & Shares ISA are entirely tax-free, so the dividend allowance does not apply to them.