A significant but perhaps less publicised change announced by the Chancellor last week was that if you are earning more than £5,000 in dividends you will be subject to an increase in tax. Notional dividend tax credits are to be abolished and the rate of tax on dividends will be increased to 7.5%, 32.5% and 38.1% for basic, higher and additional rate taxpayers respectively.
The proposed changes won’t come into effect until 6 April 2016 which gives us some time to consider the impact. We now await the draft legislation so that we can consider how this will work in practice and the best courses of action for businesses and individuals.
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