A MUST READ if you receive dividends…

The Dividend Allowance, which comes into force in 2016/17, is is such a major change that we dedicated our last newsletter to this one topic.  We have also created some worked examples to demonstrate how your tax bill is likely to increase in light of the new regime.

First, the details…

– The new dividend regime was announced in the July 2015 Budget

– The changes take effect from April 2016

– There is no concept of net and gross dividends – you will be taxed on what you receive

– The current dividend tax credit has been abolished

– There’s a new £5,000 dividend allowance where tax is due at 0%

From April 2016 tax will be payable on dividends over £5k

The new dividend tax rates are as follows:

  • 0% on dividend income under £5,000
  • 7.5% on dividend income within the basic rate tax band
  • 32.5% on divdend income within the higher rate tax band
  • 38.1% on dividend income within the additional rate band

For details of the 2016/17 tax bands visit www.gov.uk.

Who will the changes affect?

Taxpayers with modest dividend income will see no change to their tax position.  However those with dividend income above £5,000 are more likely to see higher taxation.

Crunching the numbers…

We have created a downloadable pdf document to give you a dividend tax comparison between the current and the new dividend tax regime.

Example calculations have been generated using net take home values of

£40k,

£60k

and £90k

To access this free guide visit http://a4cgroup.co.uk/DividendCalculationExamples or drop us an email and we’ll send you a copy.