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. Add your 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
How you pay depends on the amount of dividend income you got in the tax year.
Less than £5,000
You don’t need to do anything or pay any tax.
Between £5,000 and £10,000
Pay what you owe by:
- contacting the helpline
- asking HMRC to change your tax code - the tax will be taken from your wages or pension
- filling in the ‘Dividends’ section of your tax return, if you complete one
Fill in the ‘Dividends’ section of your tax return. If you didn’t send one last year, register for Self Assessment.
Selling your shares
You may need to pay tax if you sell your shares.