A reader recently asked whether his wife needs to register to file a tax return, even though no tax is due on her dividend income.
Many limited companies’ shareholdings are split between husband and wife (or between partners), and in some cases, the company’s dividend income will be the sole source of income for the main fee earner’s spouse.
Dividend income is taxed differently from salaries and is declared via the annual self-assessment process.
The Contract Eye team updated this guide for the 2025/26 tax year.
How are dividends taxed?
After deducting the personal allowance (if you qualify to receive it), dividend income is taxed at 8.75% if it falls within the basic rate tax band (between £12,570 and £50,270).
The personal allowance is £12,570 and is a tax-free amount, available to most taxpayers.
In other words, you only start paying a higher rate of dividend tax if your income exceeds £12,570 + £37,700 = £50,270.
Dividends are taxed at 33.75% in the higher rate band, and 39.35% for income over £125,140 per year.
However, just because no tax is due in a given tax year, does this mean you have no obligation to tell HMRC that dividends have been received?
If you are a lower-rate taxpayer, do you need to file a tax return?
Answering the original reader’s question – does the contractor’s wife have to register to fill in a tax return if her total income falls beneath the higher rate threshold? Emily Coltman from FreeAgent told us:
The answer to the question is yes, she does because she’s receiving dividend income, which comes under the label of ‘income from savings and investments’, of over £10,000 a year.
All company directors are obliged to complete a tax return each year, regardless of income, and there are many other scenarios when you should complete a return.
When do you have to register to complete a tax return?
I’d recommend she register with HMRC as soon as she knows she’ll receive that income. At the latest, she must register by 5th October 2025 to file a tax return for 2024/25.
