All change on the taxation of dividends
Summer Budget 2015 Dividend tax
All change on the taxation of dividends from 2016/17.
Proposed changes: the key facts
• From April 2016, notional 10% tax credit on dividends will be abolished.
• A £5,000 tax free dividend allowance will be introduced.
• Dividends above this level will be taxed at 7.5% (basic rate), 32.5%
(higher rate), and 38.1% (additional rate)
• Dividends received by pensions and ISAs will be unaffected Impact
The proposed changes are aimed to tax small companies who pay a small salary designed to preserve entitlement to the State Pension, followed by a much larger dividend payment in order to reduce National Insurance costs.
It appears that the government is anti-small companies, preferring workers to be self-employed.
This measure will have a very harsh effect on those who work with spouses in family companies.
A couple could be over £5,000 p.a. worse off.
