Tax on dividends changed (From April 2016)


Tax on dividends from April 2016


In the previous tax year (2015/16) you could earn up £31,785 (gross dividends) on top of the £10,600 personal allowance – a total of £42,385 – and pay no income tax at all. However from 6 April 2016, you only won’t pay tax on the first £5,000 of dividends that you get in the tax year. This is from 6 April 2016 to 5 April 2017 the following year.

Tax band Tax rate on dividends over £5,000
Basic rate (and non-taxpayers) 7.5%
Higher rate 32.5%
Additional rate 38.1%

You don’t pay tax on dividends from shares in an ISA.


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