From 6 April 2016 there will no longer be a notional tax credit associated with dividends received.
Currently, dividends paid to basic-rate taxpayers are regarded as having been already taxed within the corporate tax system so there is no further tax to pay on them. Under the new rules only the first £5,000 a year of dividend income will remain exempt.
The following rates will then apply after the £5,000 tax free dividend allowance:
- Basic rate taxpayers - 7.5 %
- Higher rate taxpayers - 32.5 %
- Additional rate taxpayers - 38.1%
First Published 02 September 2015, Release 4.0.19