HMRC's factsheet on new dividend treatments

by Susie Hughes at 10:20 20/08/15 (News on Business)

HM Revenue and Customs (HMRC) has published an information fact sheet on the new dividend tax free allowance which will come into effect from April 2016.

Under proposals announced in the Summer Budget, the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance. (See: Summer Budget 2015 (4): Attack on contractors' dividends - Shout99, July 2015) The Dividend Allowance means that there will be no tax to pay on the first £5,000 of dividend income, no matter what non-dividend income you have. The headline rates of dividend tax are also changing. Tax will be paid on any dividends over £5,000 at the following rates: 7.5 per cent on dividend income within the basic rate band 32.5 per cent on dividend income within the higher rate band 38.1 per cent on dividend income within the additional rate band. Unwelcome This change was one of four unwelcome initiatives in the Budget relating to contractors. The others were: Advertisement Attack on contractors' 'disguised employment' - IR35 - A review on tightening up IR35; Attack on travel and subsistence - particuarly relevant to umbrella workers Attack on contractors' Employment Allowance - which will no longer apply to sole directors. For more information, see HMRC's Dividend Allowance Factshet. Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2015

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