"Say Hello to
Independent Financial Advice"
0191 281 8811
Client Login
0191 281 8811
Client Login
Dividend allowance cut creates more tax-payers
More investors and company directors are being dragged into the tax net by the cut to the dividend allowance.
In November 2022, the Chancellor announced that the tax-free allowance for dividend income would be cut from £2,000 to £1,000, with a further reduction to £500 to be introduced in April 2024. According to HMRC’s figures, the Government is expected to take £17.6 billion from investors and company directors in the 2023-24 tax year, an uptick of more than £2 billion from the previous year. In addition, Government estimates for the dividend tax in 2022-23 have increased from £14.4 billion to £15.8 billion – providing an additional £1.4 billion for Government coffers.
For any dividends over this allowance, basic rate tax payers will be charged 8.75%, higher rate 33.75% and additional rate 39.35%. The combination of the additional-rate threshold being lowered to £125,140, and the dividend tax allowance being cut, means far more people are facing tax on their dividends up to the highest rate of 39.5%. More people will be drawn into the dividend tax net in April 2024, when the allowance is cut again to £500, which could now affect those receiving modest dividend payments. Anyone brought into paying dividend tax is required to fill in a self-assessment tax return, many for the first time.
The changes to the tax regime which has seen the raising of dividend tax rates, a reduction in the tax-free allowance and changes to the additional rate threshold will have led to higher tax bills for many.
If this is an issue for you, there are tax-efficient methods to help. Lowes Advisers can discuss your circumstances to see if and where they may apply.
Lowes Financial Management is authorised and regulated by the Financial Conduct Authority.
Subscribe Today
Receive exclusive
financial insights
straight to your inbox
We will use the information you have provided only to contact you in accordance to terms of this contact form and our privacy policy.
You can unsubscribe at any time by emailing enquiry@lowes.co.uk or by clicking the 'unsubscribe' link at the bottom of each email. Full details of how we use and secure your personal information and how to update your marketing preferences can be viewed in our Privacy Policy.