What are the dividend tax rates in the UK?

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1 min read
Last updated 12 May 2024

How to calculate tax on dividends

Add your income from dividends to all your other income (employment, rental income, etc.)
Work out your income tax band
You’ll pay tax on all your dividends based on your highest tax band

Take a look at this visual on how Income Tax works, so you know your income tax band is right.

The dividend tax rates in 2024/25

This year the dividend tax rates are:

0% on the first £500 from dividends (this is called the Dividend Allowance)
0% if your total income is under the Personal Allowance (£12,570)
8.75% if you’re a basic rate taxpayer
33.75% if you’re a higher rate taxpayer
39.35% if you’re an additional rate taxpayer.

Not sure about your dividend situation?

Not sure whether you need to file a tax return or report your dividend income? No worries! Get a professional, accredited accountant to help guide you in the right direction. Plus, they can help you with your tax efficiency. Book your tax advice consultation today for a low, one-off fee.

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How about tax on dividends from investments?

Rules are simple here:

Zero tax on dividends from shares in a stocks & shares ISA
You pay tax on dividends from any other shares you own, even if you reinvest these dividends into purchasing new shares – ask your broker or trading platform how they handle dividends from income stocks

To figure out exactly how much tax you’ll pay, you can use our dividend tax calculator for 2023/24 below:

Your situation

Tax and profit

Your dividend profits

£3,000

Dividend tax to pay

£219

£500 tax-free dividend allowance

Profit after tax

£2,781

You can either call HMRC on 0300 200 3300 to take this tax from your salary or pension, or include it on your Self Assessment tax return.

How your dividend tax is calculated

Tax on dividends is calculated pretty much the same way as tax on any other income.

The biggest difference is the tax rates – instead of the usual 20%, 40%, 45% (depending on your tax band), you’ll be taxed at 8.75%, 33.75%, and 39.35%.

The numbers look strange but the reason is simple: the company paying you those dividends already paid corporate tax, so you’re paying the difference.

This is mostly relevant if you own your company and you’re trying to decide the best way to pay yourself: dividends or salary. Keep in mind that if you pay from your salary, you also need to pay National Insurance.

In your case you earned £3,000 in dividends and £29,000 in other income (this can be salary, rent, etc.).

Dividend Tax

You don’t pay any dividend tax on the first £500 you make in dividends.

You pay 8.75% on the next £2,500

Call HMRC on 0300 200 3300 so they can change your tax code – you’ll pay the dividend tax through your salary or pension.

If you normally file a tax return, you can also pay dividend tax through it.

Need to delcare your dividend profits or losses?

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What are the dividend tax rates in the UK?

How to calculate tax on dividends

The dividend tax rates in 2024/25

Not sure about your dividend situation?