If you don’t pay Income Tax or pay it at the basic 20% rate, you don’t have to do anything about tax on your dividends. But if you’re on a higher income, you must pay additional tax.

If you pay the higher or additional rate of Income Tax

If you pay Income Tax at 40% or 45%, your dividend income is taxed based on the highest rate you pay.

But because the dividend you’re paid includes a ‘tax credit’, you use a different percentage to work out the extra tax you owe.

Highest rate of tax you pay Percentage of your dividend to pay in tax
Higher rate (40%) 25%
Additional rate (45%) 30.5%

How to pay additional tax on dividends

If you fill in a Self Assessment tax return each year, you’ll pay the extra tax through your Self Assessment bill.

If you’re not paying the extra tax, you must tell HMRC

HMRC Income Tax enquiries
Telephone: 0300 200 3300
Textphone: 0300 200 3319
Monday to Friday, 8am to 8pm  
Saturday, 8am to 4pm
Find out about call charges

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