2015 Summer Budget – Dividends
The 2015 summer budget announced changes to how dividend payments will be taxed as from 2016/17.
The Key points are;
|Basic Rate Taxpayer rate||0%||7.5%|
|Higher Rate Taxpayer rate||32.5% on gross divi 25% on divi net of tax credit||32.5%|
|Additional Rate Taxpayer rate||37.5% on gross divi 30.55% on divi net of tax credit||38.1%|
According to the Chancellor, the net result is that 85% of taxpayers will be better off or at least no worse off…….
Basic Rate Taxpayers
If receive dividend income above £5,000 will be worse off, because at present they pay no tax until they hit the higher rate threshold, whereas from 2016/17 they will pay 7.5% tax.
Higher Rate Taxpayers
They will be worse off if receive total net dividends (ie not grossed up) of over £21,667.
Currently; 21,667 x 25% = £5,416.75
From 2016/17; (5,000 x 0%) + (16,667 x 32.5%) = £5,416.77
Additional Rate Taxpayers
They will be worse off if receive total net dividends (ie not grossed up) of over £25,250.
Currently; 25,250 x 30.55% = £7,713.88
From 2016/17; (5,000 x 0%) + (20,250 x 38.1%) = £7,715.25