Taxpayers are liable to income tax on dividends above this allowance at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
Although some dividend income is tax-free, this does still count in determining whether you breach various tax thresholds.
Married couples and civil partners may like to maximise their use of the allowance by sharing investments-bearing dividends between them. There may be tax benefits in switching the weight of income and capital investments depending on the level of income.
