How to calculate the tax on dividends
- Add your income from dividends to your all other income (employment, rental income, etc.)
- Work out your income tax band
- You’ll pay tax on all your dividends based on what is 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 2022/23
This year the dividend tax rates are:
- 0% on the first £2,000 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.
How about dividends from investments?
Rules are simple here: