QUICKWISDOM Increase in tax on dividends


The dividend tax regime is to be fundamentally reformed from April 2016. Dividend tax credits are to be abolished and will be replaced with a £5,000 Dividend Tax Allowance.


The new rates of tax on dividend income above the allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.


While these rates have risen they remain below the main rates of income tax. A good time to review your situation if you receive high levels of dividends.


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