Diploma for Financial Advisers
Diploma in Accounting
Member of London Institute of Banking and Finance

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In short – how much dividend is tax free – £500
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For the 2024/25 tax year, the tax-free dividend allowance is set to £500. This means you can receive up to £500 in dividends without paying any tax.

How Dividend Tax Works in 2024/25:
If you earn dividends of £500 or less, no tax is due on that income.
If your dividends exceed £500, you will pay tax on the amount above this limit based on your income tax band. The tax rates for dividends remain the same as in the previous tax year.
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Here are the tax rates for dividends above £500 in the 2024/25 tax year:

Basic rate taxpayers (income up to £50,270): 8.75%
Higher rate taxpayers (income between £50,271 and £125,140): 33.75%
Additional rate taxpayers (income over £125,140): 39.35%
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Example:
If you earn £1,500 in dividends in 2024/25:

The first £500 is tax-free.
You will pay tax on the remaining £1,000 according to your income tax band.

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