Dividends

Today the government confirmed that there will be a new levy introduced to pay for the health and social care crisis that we are currently facing as a country. Although it has been announced as a simple 1.25% levy, there is a bit more to it. 

From April 2022 there will be an additional 1.25% added on top of National Insurance. This is both to the employee and the employer and the self employed. This method of collecting it is temporary, because HMRC do not have the ability to get their systems in place.

In the Summer Budget Newsletter we outlined the dramatic new rules for taxing dividends that will apply from 6 April 2016.

As previously reported, there will be no 10% credit against the tax on dividends. Dividends above the £5,000 will be taxed at 7.5% if they fall into the basic rate of tax, 32.5% if they are at higher rates and 38.1% for dividend income falling into the additional tax rate. Currently dividends falling into the basic rate band are effectively tax free.