The tax-free dividend allowance for 2023/24 was £1,000. Any dividends you received between 6 April 2023 and 5 April 2024 up to that amount were taxed at 0%, and only dividend income above £1,000 attracted tax, at rates that depended on where the income sat in your overall tax band.
What the £1,000 Allowance Actually Was
The £1,000 figure worked as a 0% tax band, not a deduction. Dividends covered by it still counted toward your total taxable income and could push you into a higher band for other purposes, even though the dividends themselves carried no tax.
The allowance applied per person, not per company or per shareholding. If you held shares in three companies and received £400 from each, the combined £1,200 used up your allowance and left £200 to be taxed. Spouses and civil partners each got their own £1,000, so between them a couple could receive £2,000 tax-free.
If your only dividend income for the year was £1,000 or less and you had no other reason to file a Self Assessment return, you owed nothing on it and nothing needed to be reported.
How Dividends Stacked With Your Personal Allowance
Dividends are treated as the top slice of your income.1GOV.UK. Savings and Investment Manual – SAIM1090 HMRC stacks income in a set order: employment and pension income first, savings interest next, dividends on top. That ordering decides which tax band your dividends fall into.
The Personal Allowance for 2023/24 was £12,570.2GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years If your total income from all sources stayed below that figure, dividends were absorbed entirely by the Personal Allowance and no tax was due. The £1,000 dividend allowance then sat on top of any unused Personal Allowance, creating a further layer of 0% coverage.
A worked example makes this clearer. Say you earned a £10,000 salary and received £4,000 in dividends. Your salary used £10,000 of the £12,570 Personal Allowance, leaving £2,570 unused. The first £2,570 of your dividends filled that gap at 0%. The next £1,000 was covered by the dividend allowance, also at 0%. Only the remaining £430 was taxable, at the basic rate of 8.75%, giving a tax bill of about £38.
The 2023/24 Dividend Tax Rates
Once your dividend income cleared both the Personal Allowance and the £1,000 dividend allowance, the excess was taxed according to where it fell in your overall income:
- Basic rate, 8.75%: total taxable income from £12,571 to £50,270
- Higher rate, 33.75%: total taxable income from £50,271 to £125,140
- Additional rate, 39.35%: total taxable income above £125,140
Because dividends sit on top of the stack, your salary and other income decide where they start being taxed. Someone on a £48,000 salary had only £2,270 of basic rate space left. The first £1,000 of dividends was covered by the allowance; anything beyond the next £2,270 was taxed at 33.75% rather than 8.75%.2GOV.UK. Income Tax Rates and Allowances for Current and Previous Tax Years
Traps That Catch People Out
The Personal Allowance Taper
If your adjusted net income went above £100,000, the Personal Allowance shrank by £1 for every £2 over the threshold and disappeared entirely at £125,140.3GOV.UK. Income Tax Rates and Personal Allowances Dividends count toward adjusted net income, so a large dividend could trigger the taper even if your salary alone was below £100,000. Losing the Personal Allowance in this band produces an effective marginal rate of 60%, which surprises people who never checked.
High Income Child Benefit Charge
Dividend income also counted toward the threshold for the High Income Child Benefit Charge, which in 2023/24 kicked in when either parent’s adjusted net income exceeded £50,000.4GOV.UK. Child Benefit Tax Calculator If your combined salary and dividends crossed that line, you were required to repay part of your Child Benefit through Self Assessment.
Marriage Allowance
If one partner earned less than the Personal Allowance and the other paid tax only at the basic rate, the lower earner could transfer £1,260 of their Personal Allowance, giving the recipient a £252 reduction. Eligibility depends on neither partner paying tax above the basic rate, and when testing this HMRC ignores the dividend allowance. If your dividends would have pushed you into the higher-rate band without the allowance shielding them, you did not qualify for the transfer, even though your actual tax bill sat at the basic rate.
Reporting Dividend Income for 2023/24
How you reported the tax depended on the amount. If total dividends came to £10,000 or less, you could ask HMRC to collect the tax by adjusting your PAYE code, provided you told them after the end of the tax year and before 5 October 2024.5GOV.UK. Tax on Dividends – How to Report Tax on Dividends
If your dividends exceeded £10,000, a Self Assessment return was required. The online filing deadline for 2023/24 was 31 January 2025, which was also the payment deadline.6GOV.UK. Self Assessment Tax Returns – Deadlines Miss it and penalties build up quickly:
- Immediately after the deadline: £100 fixed penalty, even if you owe nothing
- After 3 months: £10 a day, up to £900
- After 6 months: 5% of the tax due or £300, whichever is greater
- After 12 months: a further 5% of the tax due or £300, whichever is greater
Interest also runs on unpaid tax from the deadline date.7GOV.UK. Self Assessment Tax Returns – Penalties If a 2023/24 return is still outstanding, the position may already be uncomfortable, but filing late still stops the clock and is better than not filing.
How Long to Keep the Paperwork
If you are not self-employed, HMRC asks you to keep records for at least 22 months after the end of the tax year they relate to. For 2023/24, that means holding on to dividend vouchers, broker statements, and supporting documents until at least 31 January 2026. Self-employed individuals and partners must keep records for at least five years after the 31 January filing deadline.8HM Revenue & Customs. A General Guide to Keeping Records for Your Tax Return If HMRC has opened an enquiry, keep everything until it is resolved regardless of the standard window.
Where the Allowance Has Gone Since
The £1,000 figure for 2023/24 was already a cut. The dividend allowance was £2,000 from 2018/19 through 2022/23, then halved to £1,000 for 2023/24, and halved again to £500 from 2024/25 onward.9GOV.UK. Changes to Tax Rates for Property, Savings and Dividend Income The £500 allowance still applies for 2025/26 and 2026/27.
The rates have also moved. The 2023/24 dividend rates of 8.75%, 33.75%, and 39.35% will become 10.75%, 35.75%, and 39.35% from 6 April 2026.10GOV.UK. Tax on Dividends If you are reconstructing a 2023/24 position, use the 2023/24 figures throughout; the current numbers do not apply retrospectively.