Explained: How Dividend Tax works and when you pay it
Managing your tax liability could help reduce your overall tax bill and get more out of your money. If you’re unsure how and when you might pay Dividend Tax, read on to find out.
A dividend is one way a company can distribute profits to shareholders. You might receive dividends if you hold shares in dividend-paying companies or if you’re a business owner.
Changes over the last few years mean more people are paying Dividend Tax.
For example, the amount you can receive in dividends before tax is due, known as the “Dividend Allowance”, gradually fell from £5,000 in the 2017/18 tax year to £500 in 2024/25.