But if you are an investor who relies on income from share dividends you will also be facing a new tax regime in which some will gain, but others will lose. Under the old system, all taxpayers were subject to a 10% notional tax credit on dividend payments. As a result basic rate taxpayers you had no more money to pay while higher and additional rate taxpayers paid an effective tax rate of 25% or 30.56% respectively.
Under the new system, all dividends below £5,000 a year will be free of tax but above that level, basic rate taxpayers will pay 7.5%, and those in the higher rate will pay 32.5%. Those who receive less than £5000 a year in dividend income will therefore pay less in tax than they did or continue paying no tax at all. But those who receive dividends worth more than £5,000 will be paying more.
The government says 95% of taxpayers, and 75% of dividend recipients, will either gain or be unaffected they say around 1m people will pay less tax. But an extra 200,000 will now have to pay tax who didn't before. Enable’s IFA’s are here to help you understand the new savings allowances.
Source: BBC
Issued by: Enable Independent Financial Life Planners • 25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority. It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us. NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE
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