There are two ways you make money from investing. One is when the shares increase in value and then you reap a nice little profit when you sell them. The other is when they pay dividends. Dividends are a bit like interest on a savings account. If a company makes a profit, it gives some of it back to you - it could be on a regular basis or as a one-off. And just as you have a personal savings allowance for interest on savings, you also have a dividends allowance each tax year where the first £5,000 you receive is tax free. Any dividends received above this allowance will be taxed - at 7.5% for basic-rate taxpayers, 32.5% for higher-rate tax payers and 38.1% for additional-rate ones. If you’re contacted out of the blue by someone inviting you to invest and want to know how to buy shares online, say ’no’. It is almost certainly a share scam, often referred to as a ’boiler room’ scam. Here fraudsters will cold-call investors offering them worthless, overpriced or even non-existent shares. While they promise high returns, those who invest usually end up losing their money. And remember, if it sounds too good to be true, it probably is. 86448