New Dividend taxes
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Discussion

PurpleMoonlight

Original Poster:

22,362 posts

188 months

Monday 31st August 2015
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HMRC have published guidance.

https://www.gov.uk/government/publications/dividen...


The £5000 untaxed allowance counts towards your tax banding. See following example:

“I have a non-dividend income of £40,000, and receive dividends of £9,000 outside of an ISA”

Of the £40,000 non-dividend income, £11,000 is covered by the Personal Allowance, leaving £29,000 to be taxed at basic rate.

This leaves £3,000 of income that can be earned within the basic rate limit before the higher rate threshold is crossed. The Dividend Allowance covers this £3,000 first, leaving £2,000 of Allowance to use in the higher rate band. All of this £5,000 dividend income is therefore covered by the Allowance and is not subject to tax.

The remaining £4,000 of dividends are all taxed at higher rate (32.5%).



Greedy s.

mikef

6,158 posts

282 months

Tuesday 1st September 2015
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Predictably none of their examples are the more usual taking £7200 out of the company as salary and £100K as dividend...