Wrigley Partington

Chartered Accountants & Business Advisors

Dividend Taxation

Wrigley Partington Offices

HOW WILL DIVIDENDS BE TAXED FROM APRIL 2016?

The current system of the 10% tax credit on dividend income will be abolished, and tax will be due on the net payment.

After the personal allowance has been taken into account (£11,000 from April 2016 if you are entitled to the entire amount), all individuals will be able to receive £5,000 of dividend income with no tax liability at all.

So, if your entire income is £16,000 or less, you will pay no dividend tax at all.

Three new dividend tax bands will be created, and will apply to all dividend income in excess of £5,000 per year

7.5% (basic rate)

32.5% (higher rate)

38.1% (additional rate)

However, the Treasury have since confirmed that the £5,000 dividend ‘allowance’ is actually a zero rate tax band just for dividend income, and it will form part of the £32,000 Basic Rate Band (BRB) next year. It will not be in addition to the BRB, as most commentators had hoped

COMPARISON OF THE DIVIDEND TAX TAKE

This table shows how much more dividend tax you will pay in 2016/17 compared to the current year, assuming that you take the personal allowance as salary in each tax year (£10,600 and £11,000 respectively) and have no other income.

NET DIVIDENDS 2015-16 TAX 2016-17 TAX DIFFERENCE
£28,606.50 £0 £1,770 £1,770
£30,000 £348 £1,875 £1,527
£40,000 £2,848 £4,625 £1,770
£50,000 £5,348 £7,875 £2,527
£60,000 £7,848 £11,125 £3,277
£70,000 £10,348 £14,375 £4,027
£80,000 £12,848 £17,625 £4,777
£90,000 £16,541 £21,000 £4,459
£100,000 £20,233 £25,500 £5,267
£110,000 £22,733 £30,000 £7,267
£120,000 £25,233 £33,375 £8,142
£130,000 £27,986 £36,625 £8,639
£140,000 £31,041 £39,931 £8,890
£150,000 £34,097 £43,741 £9,644
£200,000 £49,374 £62,791 £13,417

Wrigley Partington Chartered Accountants
Sterling House, 501 Middleton Road
Chadderton, Oldham OL9 9LY

0161 622 0222

info@wrigleypartington.co.uk

Disclaimer: We have taken every precaution in making sure that the information contained in these documents is accurate. The nature of the information provided is for your general information only. The content does not constitute legal or other professional advice.

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Address

Wrigley Partington Chartered Accountants

Sterling House

501 Middleton Road

Chadderton, Oldham

OL9 9LY