Dividend Tax
We are now starting to see reports regarding the Chancellor, Jeremy Hunt’s possible plans to increase dividend tax. Whilst this is currently only a rumour, we feel we should provide you with the details we know so far.
Jeremy Hunt has reportedly asked officials to look at raising the dividend taxation rate, as well as cutting the tax-free allowance for dividends. No decisions have yet been made on this.
Under the option being looked into by the Treasury there would be a 1.25 percentage point increase in dividend taxation across the UK’s three tax bands, currently 8.75% for the basic rate, 33.75% for the higher rate and 39.35% for the additional rate.
He is considering halving the tax-free dividend allowance from £2,000 to £1,000. According to a government tax ready reckoner that move would raise £455mn in the next tax year.
The budget is currently due to be announced on Thursday 17th November. Until this date we expect to receive no confirmation from the government in response to what their plans are. We will be holding a live stream for when the budget is released.