Dividend tax is a tax on your share returns

In this article we’ll explain what dividend tax is, what you get taxed on, how it works and how you might be able to reclaim the tax you pay.

Dividend tax is a tiered tax, so you pay more as you earn more. It’s relevant for people who have money invested in the shares of a company.

Too busy? Here’s Dividend Tax in 30 seconds.

  • You pay 10{eb1829c0e30a1976d30e69f441dfeaffbdeda68b1ad953d70966653e91c93579} on money from share dividends or selling shares
  • You can get 10{eb1829c0e30a1976d30e69f441dfeaffbdeda68b1ad953d70966653e91c93579} back as a tax credit
  • Basic-rate taxpayers have no further tax to pay.
  • Non-taxpayers also have this tax deducted and can’t claim it back.
  • Higher-rate taxpayers pay dividend tax at 32.5{eb1829c0e30a1976d30e69f441dfeaffbdeda68b1ad953d70966653e91c93579}- but after the tax credit this becomes an effective rate of 25{eb1829c0e30a1976d30e69f441dfeaffbdeda68b1ad953d70966653e91c93579}.
  • Additional rate taxpayers pay dividend tax at 37.5{eb1829c0e30a1976d30e69f441dfeaffbdeda68b1ad953d70966653e91c93579} but after the tax credit it’s effectively 30.6{eb1829c0e30a1976d30e69f441dfeaffbdeda68b1ad953d70966653e91c93579}.

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If you own shares in a company, you may get a dividend payment.

Only higher or additional rate taxpayers pay tax on dividends. Check what tax rate you pay.

If you don’t have tax to pay, you only need to tell HM Revenue and Customs (HMRC) about your dividends if you have to file a Self Assessment tax return.

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