The ignorance and misinformation is ridiculous.
Yes, you do have to declare dividends on your tax return.
No, the rate of tax on dividends is not 20%.
Everyone, regardless of income, has a nil rate dividend band. It used to be £5,000, it is now £2,000. So on the first £2k of dividends any individual receives, there will be no tax.
Dividends paid above that nil rate band will be taxed at 7.5% on the basic rate, 32.5% on the higher rate, and 38.1% on the additional rate. Which rate applies depends on how much other income you have received, and dividends are always taxed last (so if you have e.g. rental income in excess of the basic rate threshold, you can't switch it with dividends to get the 7.5% rate on the dividends; you will need to tax them at the higher rate of 32.5%).
Say someone had a salary of £50k and received £10k in dividends.
£12,500 of his salary would have no tax, as it is covered by the personal allowance.
The remaining £37,500 of his salary would be taxed under the basic rate band at 20%. This would bring him up to the limit of the basic rate (£37,500 this year, the limit used to be £34,500).
The first £2k of dividends will be tax free.
The remaining £8k of dividends will be taxed at the higher rate of 32.5%, as his salary has used up all his personal allowance and basic rate band.
The rates of dividends for an individual are slightly lower (7.5% / 32.5% / 38.1%) compared to tax on other sources of income (20% / 40% / 45%) however it is important to remember that corporation tax of 19% will have been paid before any dividends to shareholders are payable, so this cash is being taxed twice. Once when the company declares it as profit, and once when the director or shareholder declares it as income.