What is the tax exemption for dividend income for all taxpayers?

The correct answer regarding the tax exemption for dividend income for all taxpayers is £2,000. This exemption allows individuals to receive up to £2,000 in dividend income each tax year without incurring tax on that amount.

This exemption is particularly important as it encourages investment in shares, making it tax-efficient for individuals to earn income from dividends. It simplifies the tax implications for those who receive dividends, as any amount above this exemption will be subject to dividend tax rates, which can vary depending on the taxpayer’s overall income.

It's essential for taxpayers to be aware of this exemption limit to plan their investments and understand the potential tax implications of their portfolio.