Key Points – Changes to Dividend Tax 2017
The proposed changes to the dividend tax allowance has now been withdrawn due to General Elections. The tax-free dividend allowance would have been decreased from £5000 to £2000 which would have affected small business owners and the self-employed.
Rates for Dividend Tax
The tax on dividends as it stands now is as follows:
| Dividend tax-free allowance | £5000 |
| Basic rate | 7.5% on earnings up to £33,500 |
| Higher rate | 32.5% on earnings up to £150,000 |
| Additional rate | 38.1% on earnings above £150,000 |
Dividend Tax-Free Allowance
The dividend tax-free allowance is £5000 per year and will remain at this level for 2017/2018.
Receiving Dividends
Directors of a limited company with shares in a company will receive dividends. If you have a Share ISA you will also receive dividends which are tax free. Dividends from one’s Personal Allowance must not be calculated into the tax-free dividend allowance of £5000.
Paying Dividend Tax to HMRC
If the dividend you receive is less than £5000 you do not need to pay any tax on it and you do not need to register with HMRC. However, if your dividend is £5000 -£10 000 you will need to register with HMRC for self-assessment and change your tax code.
Stuart Norman
30+ years experience in Accountancy. Started in industry with a wealth of Manufacturing experience and since 2013 having set up Clearview Accountancy and Finance Ltd, we have been servicing clients and helping them run successful businesses nationwide.
Clearview Accountancy and Finance Ltd 