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UK investment tax, minus the strain

Made a profit from dividends but shedding tears from the hassle of the tax implications? 

We created this one-stop-shop to help you navigate UK investment tax. Think calculators, guides, tax tips, and more. Click through the tabs below for tax help, made for you.

Investor tax - dividends

Your situation

Outlined number oneOutlined number one
How did you earn dividends?
Dividend income
Other income
?

Tax and profit

Outlined number two
  • Your dividend profits
    £3,000
  • Dividend tax to pay
    £75
    £2,000 tax-free dividend allowance
    ?
  • Profit after tax
    £2,925
  • 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 7.5%, 32.5%, and 38.1%.

    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 £2,000 you make in dividends.

    You pay 7.5% on the next £1,000

    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.

    Did you know? 🤔

    You can earn up to £2,000 per tax year in dividends tax-free by claiming the Dividend Allowance. If you profit more than this, you’ll need to file a tax return. But if you make less than £2,000, you won’t need to declare it. 

    Get your tax toolkit

    Stay on top of UK investment tax with our Tax Return Toolkit. Learn more about Rishi Sunak’s 1.25% rise in tax on dividends, check out our Spotify playlists to motivate you for tax filing, or download our tax deadline calendar straight into your Gmail.

    2022 dividend tax changes

    Learn more

    Songs to help you focus

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    Tax deadline calendar

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