New Tax Year – New Dividend Rules…


From 5 April 2016 the taxation of Dividends is changing and this is likely to significantly increase the tax that you have to pay. The good news is that you do not have to pay tax on the first £5,000 of your dividend income, no matter what other income you have.

However the tax you pay on dividends over £5,000 is increasing by 7.5% and will be at the following rates:

  • 7.5% on dividends within the basic rate band
  • 32.5% on dividends within the higher rate band
  • 38.1% on dividends within the additional rate band

If you would like to discuss the changes and its implications to the way you draw dividends, please get in touch with our tax department.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of mrpuen at

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