HMRC has clarified the dividend tax thresholds for the 2025 tax year, confirming that taxpayers can earn up to £500 in dividend income tax-free, with rates of 10.75%, 35.75%, and 39.35% applying to income above that based on tax band. The guidance follows a taxpayer's complaint about difficulty reaching HMRC by phone.
One taxpayer, who contacted HMRC via X (formerly Twitter), described their experience: "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." The post prompted HMRC to issue a formal response on how to handle dividend income.
Dividend tax rates for 2025/26
For the 2025/26 tax year, the dividend allowance remains at £500. Once this allowance is used, the tax rate on dividends depends on your income tax band:
- Basic rate taxpayers pay 10.75% on dividend income.
- Higher rate taxpayers pay 35.75%.
- Additional rate taxpayers pay 39.35%.
These rates apply to the 2025 tax year, which ends on April 5, 2026. HMRC's response specifically addressed the 2025 dividend income, noting that taxpayers must report it via self assessment if they owe tax.
How to report dividend income
According to HMRC, if you have tax to pay on dividend income from 2025, you must report it on a self assessment tax return. If you do not normally file a self assessment return and your dividend income is £10,000 or less, you must notify HMRC by October 5 following the end of the tax year (April 5).
For those who need to report but are not registered for self assessment, HMRC advises: "If you do not file self assessment and dividend income is £10,000 or less, tell us before October 5." You can pay the tax due through an adjustment to your tax code or by calling HMRC directly.
Contacting HMRC
The dedicated HMRC helpline for this issue is 0300 200 3300, open Monday to Friday from 8am to 6pm. If your dividend income exceeds £10,000, you must complete a self assessment tax return, and you must inform HMRC of your need to file by October 5 after the end of the tax year in which you received the income.
The taxpayer's experience highlights the challenges some face in reaching HMRC, but the authority's response provides clear steps for compliance. With the October 5 deadline approaching for the 2025 tax year, taxpayers are urged to act promptly to avoid penalties.
