HMRC has clarified the rules around the £10,000 limit that applies to some taxpayers, after a customer asked for help following a message from their bank.
Customer query about dividend income
The customer asked how to report dividend income from 2025, explaining: "I just got a tax report from the bank and tried to call the HMRC helpline. I spent 45 minutes on the phone, was told to hang up and fill out a form." But they claimed that when they looked at the form, it appeared to have nothing to do with income or dividends.
Dividend allowance and tax rates
You can earn up to £500 in dividend income each year tax free. Once you have used up the allowance, the rate you pay on any income depends on your income tax band. The tax rates that apply are: for basic rate taxpayers - 10.75 per cent, for higher rate taxpayers - 35.75 per cent, and for additional rate taxpayers - 39.35 per cent.
HMRC response
In response to the query, HMRC explained the key rules that apply. The authority said: "if you have tax to pay on 2025 dividend income, report it on a self assessment return. If you do not file self assessment and dividend income is £10,000 or less, tell us before October 5."
How to report tax on dividends
You have to report to HMRC if you have dividends that you need to pay tax on every year that you do so. If you do not send a self assessment tax return, you have to tell the tax authority after the end of the relevant tax year, which will end April 5, and before October 5.
In this case, you can pay the tax through an adjustment to your tax code, or by calling HMRC about the issue. The number to call is 0300 200 3300. Lines are open Monday to Friday from 8am to 6pm.
If your dividend income is more than £10,000, you will need to fill in a self assessment tax return. In this case, you will need to tell HMRC that you need to complete one by October 5 after the end of the tax year in which you received the income.
