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Record 3.7 Million UK Investors Caught by Dividend Tax After Allowance Halved

HMRC data confirm the cut to £500 will draw 3.67 million investors into the tax net, pushing revenue beyond £450 million in 2024/25

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The number of people paying dividend tax is almost double that of two years ago, HM Revenue & Customs figures show
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Overview

  • The dividend allowance was reduced from £2,000 to £1,000 in April 2023 and then to £500 in April 2024.
  • HMRC figures show the number of dividend taxpayers has risen from 1.9 million in 2022/23 to a record 3.67 million in 2024/25.
  • Updated HMRC modelling based on recent income data identifies 865,000 new taxpayers in 2023/24 and 480,000 in 2024/25.
  • The reduction to a £500 allowance is forecast to generate £450 million in revenue for the 2024/25 tax year.
  • Many investors will have tax collected through PAYE or simple assessment, but a significant number of basic-rate taxpayers must now file self-assessment returns as compliance requirements expand.