tax payable on dividends

artydave

I know in an ISA that you dont pay any tax on dividends that you get from shares and that outside of an ISA wrapper you have a dividend allowance of £2000 pa before you pay any tax.
I also know that the tax you pay on dividends outside of a an ISA wrapper depends on your income tax band.
However, if you dont pay any income tax, does that you mean you wouldn't pay any tax on dividends outside of an ISA wrapper until your income took you into the 20% tax bracket ?

masonic

If the dividend income falls within your personal allowance, then no you'd not pay any tax.

artydave

Thanks Masonic. Logic suggested to me that that was the case ..... i just hadn't seen it written down anywhere !

Dazed_and_confused

It is possible to incur a higher tax bill even if dividends (outside of an ISA) are within the £2,000 dividend "allowance".

There actually isn't an allowance for dividends, it is a 0% tax band and some people will have more tax to pay even when the dividends are all taxed at 0%.

Doesn't affect most people but it is certainly not uncommon situations going off the posts on here and the Cutting Tax board.

Two are those caught by the High Income Child Benefit Charge or the withdrawal of Personal Allowance if your adjusted net income is greater than £100k.