April 2016 Dividend Tax Rules Changes

It’s all change, I am afraid, on the taxation of dividends.

From 6 April 2016 new rates will  be introduced on dividend income over £5,000 as follows: Dividend Allowance Factsheet 

·         7.5% on dividend income within the basic rate band (expected to be up to £43,000)

·         32.5% on dividend income within the higher rate band (expected to be up to £150,000)

·         38.1% on dividend income within the additional rate band (expected to be above £150,000)

Under the present system an individual with no other income can receive £38,000 of dividend income tax-free. However under the new system the tax charge on this income will be in the region of £1,700

Now may be a good time to maximise dividend withdrawals before 06/04/2016, subject to availability of distributable profits.

Please give A&C Chartered Accountants a call, or drop us an email to discuss you own personal situation.