24Dec
2015
2015
Dividend taxation is changing
Murray McEwan / 0 Comments /
The way dividends are taxed will change from April 2016. If you own a limited company and pay yourself by means of dividends this will affect you the most. People who have higher levels of dividend income from investments outside of ISAs and Pensions will also be affected. In both cases this will result in more tax.
The dividend tax credit is being scrapped (cheers in the background), which will greatly simplify tax calculations. Instead a £5,000 tax-free dividend allowance will be introduced. If you receive more than £5,000 in dividends that income will be taxed at the following rates:
- 7.5% – if, including dividend income, you pay tax at the basic rate
- 32.5% – if, including dividend income, you pay tax at the higher rate
- 38.1% – if, including dividend income, you pay tax at the additional rate
A helpful factsheet produced by the government for those interested in reading more can be found here.
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