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Do I need to pay tax on my dividends?

In the current tax year (2022/23), every investor has an annual tax-free dividend allowance of £2,000. After this, the rate of tax payable on dividends will depend upon your other taxable income. If your dividend income takes you from one income tax band into the next, you will then pay the higher dividend rate on that portion of income. The table below shows how dividends in excess of the £2,000 allowance are taxed.

Please note, if stock is held in a tax-efficient wrapper, such as an ISA, Junior ISA or SIPP, there is no UK income tax to pay on the dividends.

Gross dividend Tax due Dividends after all tax
Non-taxpayer £1,000 £- £1,000
Basic rate taxpayer £1,000 £87.50 £912.50
Higher rate taxpayer £1,000 £337.50 £662.50
Additional rate taxpayer £1,000 £393.50 £606.50

The rate paid by a Scottish taxpayer depends on the rest of UK tax bands.

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