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Tax on dividends

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1. Check if you have to pay tax on dividends

You may get a dividend payment if you own shares in a company. 

You can earn some dividend income each year without paying tax.

This guide is also available in Welsh (Cymraeg).

How dividends are taxed

You do not pay tax on any dividend income that falls within your Personal Allowance (the amount of income you can earn each year without paying tax). 

You also get a dividend allowance of £500 each year. You only pay tax on any dividend income above the dividend allowance. 

You do not pay tax on dividends from shares in an ISA.

How much tax you pay

How much tax you pay on dividends above the dividend allowance depends on your Income Tax band.

This table shows the rates from 6 April 2026 to 5 April 2027. You can also see rates and allowances for past tax years.

Tax band Tax rate on dividends over the allowance
Basic rate 10.75%
Higher rate 35.75%
Additional rate 39.35%

To work out your tax band, add your total dividend income to your other income. You may pay tax at more than one rate.

You may be able to get an estimate of how much tax you have to pay on dividends you receive.

Example

You get £3,000 in dividends and earn £29,570 in wages in the 2026 to 2027 tax year.  

This gives you a total income of £32,570.  

You have a Personal Allowance of £12,570. Take this off your total income to leave a taxable income of £20,000.  

This is in the basic rate tax band, so you would pay:  

  • 20% tax on £17,000 of wages  
  • no tax on £500 of dividends, because of the dividend allowance
  • 10.75% tax on £2,500 of dividends

Check if you need to tell HMRC 

If you have dividend payments over both your unused Personal Allowance and dividend allowance, you need to report these to HM Revenue and Customs (HMRC).

2. How to report tax on dividends

You must tell HM Revenue and Customs (HMRC) every year you receive dividends that you have tax to pay on. 

How you report dividends to HMRC depends on how much you received.

Report tax on dividend income up to £10,000 

If you send a Self Assessment tax return, you must report any dividend income on your tax return. You must do this by the deadline. 

If you do not send a Self Assessment tax return, you must let HMRC know after the end of the tax year (5 April) and before 5 October. You can do this by either:

You do not need to tell HMRC if your dividends are within the dividend allowance for the tax year.

Report tax on dividend income over £10,000 

You’ll need to fill in a Self Assessment tax return.  

If you do not usually send a tax return, you must tell HMRC that you need to complete a tax return by 5 October after the end of the tax year (5 April) in which you received the income.

You can tell HMRC by registering for Self Assessment. Check how to register for Self Assessment.