TAX ON DIVIDENDS

TAX ON DIVIDENDS

At Summer Budget 2015, the government announced that dividend taxation would be reformed from April 2016 by replacing the Dividend Tax Credit with a £5,000 dividend allowance, and increasing the rates of tax paid by 7.5 percentage points in each band, to 7.5% for basic rate, 32.5% for higher rate, and 38.1% for additional rate.

Current Dividend tax allowance £5,000

The £2,000 allowance will apply from 6 April 2018.
Basic rate taxpayers 7.5%; you will pay personal tax on dividends on basic tax band
Higher rate taxpayers 32.5%
Additional rate taxpayers 38.1%

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