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Do I need to pay tax on my dividends?

From 6th April 2018 the dividend allowance is £2,000 (previously £5,000 until 2017/18). Any dividend payments  above £2,000 will be taxable at either 0%, 7.5%, 32.5% or 38.1% depending on your total taxable income. For example, a person receiving £3,000 in dividends won't pay tax if their total taxable income is under their Personal Allowance. However, they will pay tax on £1,000 at 7.5% if their total taxable income is between £12,500 and £50,000, at 32.5% on an income between £50,001 and £150,000 and 38.1% on income of £150,001 and over.

Note - Scottish taxpayers use the UK rates and bands for dividend income.

Gift Aid alert – People who at present, use their dividend tax credit as part of their calculation to decide how much they can gift aid need to recalculate. Failure to do so may mean they gift aid too much and may end up with a debt to HMRC.

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