Tax free allowance on dividends is £2000
6 April 2021 to 5 April 2022 | £2,000 |
then depending on the holders tax band you will be charged the following,
Tax band | Tax rate on dividends over the allowance |
---|
Basic rate | 7.5% |
Higher rate | 32.5% |
Additional rate | 38.1% |
You can transfer part holding to spouse / partner etc which may gain further £2000 tax allowance "free" or reduce the rate of tax above that, I'm assuming you are in the UK purchasing UK equities.
If taking the long term approach - Open an Stocks and Shares ISA - place £20,000 per person into it <each financial year> and get tax free dividend from any purchased share, typical ISA fees £10 / month, see interactive investor and other platforms etc.
If interested take a look at Royal Mail today, second day after ex-dividend date, the share dropped more than the dividend but recovered above. Value shares like these where investors take the dividend, do not usually lend themselves to trading, the capital is left to the cyclic influences of the wider market. My advice is to review the company carefully and I'd stick to FTSE100 companies with a strong forward trading statement, that will be available from the last set of results.