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An outline of the changes to the rules regarding dividends.
Dutchmans can help taxpayers in the Essex area with queries you have regarding dividends – here is an overview of the new Dividend Allowance scheme...
A person does not have to pay tax on the first £2,000 of dividend income, regardless of the level of non-dividend income. Tax is charged on dividends received over £2,000 at the following rates:
The Dividend Allowance does not reduce total income for tax purposes, and dividends within the allowance still count towards the appropriate basic or higher rate bands. They may therefore affect the rate of tax payable on dividends received in excess of the £2,000 allowance.
This is a quite straightforward example, based on 2018-19 tax rates and allowances, showing the taxable amounts after allocating the relevant allowances to the two types of income.
This example is more complicated, in that it splits the dividend allowance into two - £1,500 to use up the balance of the basic rate band and £500 to 'eat into' the higher rate band.
Dutchmans can advise businesses in the Essex area on a range of tax issues relating to dividends. Please contact us for more information.
Dutchmans is a member of the ICAEW Practice Assurance scheme.
Registered to carry on audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.