IN PLAIN ENGLISH
The amount of dividend income each tax year that's taxed at 0%.
WHERE YOU MEET IT
The Tax Year widget shows how much of it the year's dividends have used, leaving out holdings marked ISA or pension.
WATCH OUT FOR
It has been cut several times. Check the current figure on GOV.UK.
EXAMPLE
At 2026/27 rates, £2,500 of dividends with a £500 allowance leaves £2,000 taxed: £215 in the basic-rate band.
HOW IT'S CALCULATED
Allowance used = the smaller of your Taxable Dividends (less any personal allowance left over for them) and the year's dividend allowance. The rest is taxed at the dividend rate for the band it lands in. Dividends inside the allowance still count as income when working out which band the rest lands in.
EXPLAINED IN
Educational content only. It is not personal financial advice.