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Tax on dividends from April 2016

January 4, 2017

From 6 April 2016, the taxation of dividends changed and you will now pay tax on dividends received over £5,000 in the tax year. The tax you pay depends on which Income Tax band you’re in. Add your income from dividends to your other taxable income when working this out and you may pay tax at more than one rate dependent on individual circumstances. 

 

Tax Rates within the Tax bands

 

Tax rate on dividends over £5,000

Basic rate                                             7.5%

Higher rate                                        32.5%

Additional rate                                  38.1%

 

Ping has examples of how your tax is worked out if you’re over the dividend allowance.  Please ring if you would like further information or to discuss your personal situation.

 

Note:  

  • You don’t pay tax on dividends from shares in an ISA.

  • Dividends that fall within your Personal Allowance do not count towards the £5,000 dividend allowance.

 

How you pay tax on dividends

 

How you pay depends on the amount of dividend income you received in the tax year.

Less than £5,000 - You don’t need to do anything or pay any tax.

Between £5,000 and £10,000 - HMRC must be informed which Ping can do on your behalf.

Over £10,000 - You’ll need to fill in a Self Assessment tax return which Ping can help you with.

If you don’t usually send a tax return, you need to register by 5 October following the tax year you had the income.

 

 

 

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