New dividend taxation rules come into force in a few months’ time as a result of the George Osborne’s decision to overhaul, in the Chancellor’s words, ‘Britain’s archaic dividend tax regime’.
The Chancellor has been unhappy with the current dividend payment taxation system which the government inherited.
Under the new dividend taxation system, anyone who receives income from dividends paid out, will not pay tax on the first £5,000. For any income over that amount, basic rate taxpayers will pay 7.5% tax, higher rate taxpayers will pay 32.5% and additional rate tax payers will pay 38.1%.
The reform is designed to simplify the taxation of dividends. Currently basic rate taxpayers receive dividends tax-free while higher rate tax payers pay 25% tax on dividends and additional rate taxpayers pay 30.56%.
For more advice, call your local tax specialist accountancy firm in Stockport 0161 456 9666.
Please see our IN-Formed Guide on this subject with in-depth calculations and further details.