Taxation of Dividend Income

Income from share dividends paid by UK companies and dividend distributions by unit trusts, and OEICs, is paid net of tax at 10%. If you are a standard (basic) rate taxpayer you will have no further tax liability.

If you are a higher rate taxpayer, however, you face a further tax charge. Dividend income is "top-sliced" - this means you pay tax on dividend income at your highest rate. Therefore, higher rate taxpayers must pay a further 22.5% to pay, bringing the overall tax up to 32.5%.

Last Updated: April 2008 © Moneyextra.com

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