The way that dividends are taxed changed with effect from 6 April 2016. Prior to this date, the tax you paid depended on which income tax band your dividends were in. However, from 6 April 2016, you don’t pay tax on the first £5,000 of dividends you get in the tax year. The notional 10% tax credit on dividends is abolished. And is replaced by this £5000 dividends allowance (this reduces to £2,000 from 2018/19)
Above this allowance the tax you pay depends on which Income Tax band you are in.
Dividend income are treated as the top band of income. In order to work out your tax payable, you will need to add your income from dividends to your other taxable income. You may pay tax at more than one rate. You don’t pay tax on dividends from shares in an ISA.
Tax rate on dividends over £5,000