What are the dividend tax rates in the UK?

How to calculate the tax on dividends

1. Add your income from dividends to your all other income (employment, rental income, etc.)
2. Work out your income tax band
3. 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 2023/24

This year the dividend tax rates are:

• 0% on the first £1,000 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:

• 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