For all individuals, the first £2,000 of dividend income is taxed at 0%.

The government have now decided that this ‘dividend allowance’ of £2,000 will be reduced to £1,000 in the 2023/24 tax year and then again to just £500 in the 2024/25 tax year.

Bear in mind that the income tax rates applied to dividend income outside of the allowance have only recently increased to 8.75%, 33.75% and 39.35% (for dividend income falling into basic rate, higher rate, and additional rate bands respectively). Combined, these measures will mean that those reliant on dividend income will pay more tax.