Do I need to declare dividends on my self-assessment tax return?

More investors are relying on income from dividends as inflation erodes their savings pots.

At the same time, the Government will slash the tax-free allowance for dividend income in half, from £2,000 to £1,000 next month. 

Investors who hold their investments outside Isas and pensions need to consider how much dividend tax they will need to pay in the next tax year.

We look at when you need to pay tax on additional income and whether you need to declare this to HMRC.  

The dividend allowance will soon drop from £2,000 to £1,000 for the 2023/2024 tax year. 

You don’t have to pay any tax on dividend payments you receive up to that amount.

If you’re a basic rate income taxpayer, you will pay 8.75 per cent tax on dividend payments over the £1,000 limit. 

Those in the higher tax bracket pay 33.75 per cent and this rises to 39.35 per cent for additional rate taxpayers.

Source of data and images: dailymail