Investment Income Taxation

13th October 2015

New Dividend Tax Rules: Planning opportunities during transition.
In his 2015 Summer Budget George Osborne rewrote the rules for calculating the income tax that individuals and trusts pay on their dividend income:

  • Abolished the tax credit,
  • Introduced a £5k tax free dividend allowance,
  • Increased all of the tax rates on dividend income by +7.5%.

As these rules will not be introduced until the 2016/17 tax year, those in receipt of dividends have a 6 month window to re-organise their affairs to take advantage of this transitional period. Depending upon your income requirements and the level of distributable profits in your company, the simplest new personal tax strategy to adopt is to income shift, by bringing forward 2016/17 dividends to 2015/16, to take advantage of lower marginal rates of tax:

Blog entry by: Jeanette Hume.

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