HMRC is currently sending letters to taxpayers, urging them to check their dividend totals.
You may have received a letter that begins like this:
“Dear XX
Please make sure your tax return included all your dividend income.
We’re writing to ask you to check your self assessment tax return for the year ended 5 April 2024. This needs to include all your dividend income from shares in UK companies.
We’ve seen quite a few mistakes in this area on tax returns, and we want to help you get this right. This letter isn’t a compliance check.
If you’ve told us you have an adviser, we’ve also written to them.”
Although HMRC states this is not a formal compliance check, the letter should still be taken seriously. It likely means HMRC doesn’t have direct data on your dividends, but they suspect underreporting.
The letter relates to the 2023/24 tax year, for which most returns were submitted by January 2025. This was the first year the dividend allowance was halved, dropping from £2,000 to £1,000. It has since been reduced further to just £500 in 2024/25.
When these changes were announced in the Autumn Statement 2022, HMRC estimated that 3.2 million people would be affected in 2023/24, rising to 4.4 million in 2024/25—nearly three-quarters of all dividend recipients. The current outreach suggests HMRC isn’t seeing the expected level of reporting.
One challenge for HMRC is that, unlike interest from banks and building societies (which is automatically reported), there’s no equivalent system for dividend reporting. Historically, basic-rate taxpayers didn’t owe tax on dividends, and when dividend tax credits were replaced by the allowance in 2016 (initially set at £5,000), reporting remained minimal.
If you receive this letter, it’s important to verify your 2023/24 dividend figures. If corrections are needed, you or your adviser should amend your online tax return or write to HMRC by 31 January 2026.
If tracking dividends is proving difficult, it may be time to review how your investments are held and managed.
Tax treatment depends on individual circumstances and may change.
The Financial Conduct Authority does not regulate tax advice.
28th November 2025
