For information only - please contact us if you have a question.
Income Tax rates and bands. The table shows the tax rates you pay in each band if you have a standard Personal Allowance of £12,500.
Income tax bands are different if you live in Scotland.
Band Taxable income Tax rate
Personal Allowance Up to £12,500 0%
Basic rate £12,501 to £50,000 20%
Higher rate £50,001 to £150,000 40%
Additional rate over £150,000 45%
Your tax-free Personal Allowance
The standard Personal Allowance is £12,500, which is the amount of income you don’t have to pay tax on.
Your Personal Allowance may be bigger if you claim Marriage Allowance or Blind Person’s Allowance however it’s smaller if your income is over £100,000.
Personal allowance drops by £1 for every £2 earned over £100,000
your first £1,000 of income from self-employment - this is your ‘trading allowance’
your first £1,000 of income from property you rent (unless you’re using the Rent a Room Scheme)
You must tell HMRC if you have: gross property income over £1,000 up to £2,500 - contact HMRC, property income over £2,500 - register for Self Assessment
You only have to pay tax if your dividends go above your dividend allowance in the tax year.
The rules are different for dividends before 6 April 2016.
Tax year Dividend allowance
Above this allowance the tax you pay depends on which Income Tax band you’re in. Add your income from dividends to your other taxable income when working this out. You may pay tax at more than one rate.
Tax band Tax rate on dividends over your allowance
Basic rate 7.5%
Higher rate 32.5%
Additional rate 38.1%
HM Revenue and Customs (HMRC) has examples of how your tax is worked out if you’re over the dividend allowance.
You don’t pay tax on dividends from shares in an ISA.
Dividends that fall within your Personal Allowance do not count towards your dividend allowance.
How you pay tax on dividends
If you need to pay tax, how you pay depends on the amount of dividend income you got in the tax year. Up to £10,000 tell HMRC by contacting the helpline asking HMRC to change your tax code or by putting it on your Self Assessment tax return, if you already fill one in. once over £10,000 you’ll need to fill in a Self Assessment tax return. If you don’t usually send a tax return, you need to register by 5 October following the tax year you had the income.