You may get a dividend payment if you own shares in a company.
From 6 April 2016, you won’t pay tax on the first £5,000 of dividends that you get in the tax year. This is from 6 April to 5 April the following year.
Above this allowance the tax you pay depends on which Income Tax band you’re in. Include all income from dividends to your other taxable income when working this out. You may pay tax at more than one rate.
|Tax band||Tax rate on dividends over £5,000|
|Basic rate (and non-taxpayers)||7.5%|
HM Revenue and Customs (HMRC) has examples of how your tax is worked out if you’re over the dividend allowance.
You don’t pay tax on dividends from shares in an ISA.
How you pay tax on dividends
You don’t need to do anything if your dividend income is less than £5,000.
If you need to send a tax return, fill in the ‘Dividends’ section of your return.
If you don’t need to send a return and your dividend income is over £5,000, either:
- contact the helpline to pay what you owe
- ask HMRC to change your tax code - the tax will be taken from your wages or pension
Selling your shares
You may need to pay tax if you sell your shares.
Dividends in trusts
You don’t get the dividend allowance on a trust’s dividends if you’re one of its trustees.