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Autumn Budget 2021 – Dividend tax rates

As announced on 7 September 2021, the 1.25% increase in NIC contributions from April 2022 will be mirrored by a similar increase in the tax charge on dividends. From April 2022, the dividend tax increases will apply as follows:

  • Basic rate taxpayers will see an increase from the present 7.5% to 8.75%.
  • Higher rate taxpayers will see an increase from 32.5% to 33.75%.
  • Additional rate taxpayers will see an increase from 38.1% to 39.35%.

This change will apply UK-wide. The change was confirmed at the Autumn Budget and legislated for in Finance Bill 2021-22.

The dividend tax allowance was first introduced in 2016 and replaced the old dividend tax credit with an annual £5,000 dividend allowance with tax payable on dividends received over this amount. The tax-free dividend allowance was reduced to £2,000 with effect from 6 April 2018 and has remained fixed at that level ever since. The upcoming change to the rates of Income Tax from April 2022 will be the first increase since the allowance was launched in 2016.

The dividend tax is charged on taxable dividend income an individual receives that falls outside of the personal allowance and that exceeds the dividend allowance. Taxable dividend income excludes, for example, dividends on assets held in ISAs.

According to government figures, around 59% of individuals with taxable dividend income are not expected to pay any dividend tax in 2022-23. The average loss of those affected is around £335 although there will be some additional and higher-rate taxpayers who will owe more tax.

Source: HM Revenue & Customs Thu, 28 Oct 2021 00:00:00 +0100

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC
FT
BBC
VEALE WASBROUGH VIZARDS
CESP
PRACTICE INDEX
SIMCOMM ACADEMY

More Local:
FOOTPLATE EXPERIENCE
ANGLEBURY PRESS
OFFCAMBER.CO.UK