By Scrimpr
Updated 18 Jan 2026
Tax on cash payments you receive from your investments. ISAs are exempt.
Dividend Tax
Tax on cash payments you receive from your investments. ISAs are exempt.
Grow Money
Updated Jan 2026
By Scrimpr
Updated 18 Jan 2026 What is Dividend Tax?
Dividend Tax is a tax on income from dividends (payments companies make to shareholders from their profits). If you receive dividends outside a tax-free wrapper, you may owe tax on them.
How much is the dividend allowance?
You can receive £500 in dividends per tax year before you pay anything. This allowance resets every April.
How much Dividend Tax do you pay?
Above the £500 allowance, the rate depends on your income tax band:
- Basic rate taxpayers. 8.75%
- Higher rate taxpayers. 33.75%
- Additional rate taxpayers. 39.35%
Do you pay Dividend Tax in an ISA?
No. Dividends received inside an ISA or SIPP are tax-free.
In a GIA, the first £500 is covered by your allowance. Beyond that, you may owe tax.
Key points about Dividend Tax
- Tax on dividend income, not on growth
- £500 annual allowance. Dividends below this are tax-free
- ISAs and SIPPs are exempt. No Dividend Tax inside these accounts
More information
Scrimpr links to official sources so you can verify what you’ve learned.
