Tax on Dividend
If you own shares in a company you may well pay yourself via a dividend.
Previously, if you were a basic rate tax payer you were not required to pay any additional tax on dividends. As of 6 April 2016, you won’t pay tax on the first £5,000 of dividends that you get in the tax year. However, above this allowance the tax you pay depends on which income tax band you are in. Add your income from dividends to your other taxable income when working this out. You may pay tax at more than one rate.
At Bells we will be carefully planning when and how much dividends our clients should be taking in the current tax year. Please do get in touch if you are worried about how this change in regulation may affect you.