Dividend tax increases
From 6 April, taxes on dividend income are set to rise. The ordinary rate will move from 8.75% up to 10.75%, while the upper rate jumps from 33.75% to 35.75%. (The additional dividend rate, however, stays at 39.35%.)
This adjustment will impact most of those who receive dividends, including business owners drawing part of their income from dividends, as well as investors who depend on shares and funds that pay dividends. For many directors of limited companies, dividends represent a substantial share of their earnings.
Dividend tax is charged after a £500 allowance, using the standard income tax thresholds of £50,270 and £125,140 to determine whether dividends are taxed at ordinary, upper or additional rates.
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