Dividend tax rate for higher rate taxpayers on dividends beyond the allowance?

• A. 8.75%
• B. 33.75%
• C. 0%
• D. 39.35%

Answer: (B)

Dividends have their own tax rates, separate from regular income tax, and there’s a tax-free dividend allowance. After you account for that allowance, any dividend income that falls in the higher-rate band is taxed at the higher dividend rate. In this setup, that rate for dividends beyond the allowance is 33.75%. The other figures would apply to different bands or rule sets, but not to the higher-rate treatment described here.