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0% Dividend tax rate being reduced in April 2018

With effect from April 2018 the government will be reducing the £5,000 tax-free dividend allowance to £2,000 per individual.

To bring the way company directors are taxed, closer to self-employed individuals, after the first £2,000 of dividend income the excess will be taxed at 7.5% for basic rate, 32.5% for higher rate, and 38.1% for additional rate. If you trade through a company then you should consider declaring dividends up to £5,000 before 5 April 2018.

The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.

Written by Callum Somers ACCA


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