What’s New?

In his Spring Budget 2017 the chancellor announced that from 6 April 2018 the tax free dividend allowance would reduce to £2,000 (previously £5,000).

Finance Act 2016 included legislation for major changes to dividend tax from 6 April 2016, which included the abolition of dividend tax credits – The main repeals: – ITTOIA 2005 ss 397-398, 400, 414, 421 re distributions and tax credits are repealed as is CTA 2010 s 1109 re certain distributions which has the effect of removing a tax credit on dividends received from companies and removes the increase in taxable income as a result of the credit. They also remove the treatment of non-qualifying distributions as having suffered tax at the dividend ordinary rate.

 

From 6 April 2016

Tax band
Tax rate on dividends over £5,000
Basic rate (and non-taxpayers) 7.5%
Higher rate 32.5%
Additional rate 38.1%

2015/16 and earlier

  Dividend ordinary rate Dividend upper rate Dividend additional rate
2015/16 10% 32.5% 37.5%
2014/15 10% 32.5% 37.5%
2013/14 10% 32.5% 37.5%
2012/13 10% 32.5% 42.5%
2011/12 10% 32.5% 42.5%
2010/11 10% 32.5% 42.5%
2009/10 10% 32.5%

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