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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.

Written by Callum Somers ACCA


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