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Dividend allowance

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.

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