Historical dividend tax question

[Simpo Two]

I've come across an old statement (2009) from a former IFA/DFM showing the sale of securities. From every sale, 10% tax was paid. However, I don't recall them ever talking about allowances. Does anyone know what the dividend allowance was in FY 2009/10 please? I can't find it online.

[Eric Mc]

There was no such thing back then.

[SS2.]

I think the dividend allowance was only introduced in 2016 (or thereabouts).

[Eric Mc]

Historically, dividends were just treated as normal income. It was added to your other income and taxed accordingly.

In even older days, 20% tax was "deemed" to have already been paid by the company paying the dividend so the individual was "deemed" to have covered any tax due at 20% by deduction. The individual only had to pay Income Tax on the dividend if their income (including dividends) took them into the higher rate tax brackets.

[Simpo Two]

Ah great, thanks very much. Good job I didn't try and haul them by their nuts off to the FOS then

Funny that an allowance would be introduced in 2016 then effectively eliminated so soon afterwards. Thanks Rishi. Bring back Boris.

[Jon39]

Eric Mc said:

Historically, dividends were just treated as normal income. It was added to your other income and taxed accordingly.

In even older days, 20% tax was "deemed" to have already been paid by the company paying the dividend so the individual was "deemed" to have covered any tax due at 20% by deduction. The individual only had to pay Income Tax on the dividend if their income (including dividends) took them into the higher rate tax brackets.

That all worked quite well
Incentives are of course needed to encourage saving, otherwise just spend income and trust that the state will help later.

I ran a Grandpa fund for my children in the days that you refer to.
Grandpa could reclaim tax on the regular annual gifts (forget the name of that scheme), then because the dividends received did not exceed the children's personal allowance, I could reclaim the tax credit deductions on their behalf.
Reluctantly spent time fiddling about with HMRC paperwork, but many years later, when the 'children' were about 30 years old, they seemed to appreciate my efforts, because those funds fully paid their first house purchase deposits.

Think it was Mr. Brown who ended that arrangement, in order "to grow the economy".
That plan did not go too well (removed an incentive) and it particularly hit everyones pension scheme (except non-funded state employee arrangements (are they still defined benefit?).

Speaking of similar political changes, are you looking forward to the water industry being nationaised again?
Unlike before, to bring about any improvements, presumably priority will be given this time, for tax payers' money to be spent on the out of sight water supply and sewerage engineering infrastructure, instead of the usual (vote winning) schools and hospitals. -
Mrs Thatcher moved the whole industry, because hardly any state money had been allocated to that industry for years, and she wanted private investment to pay the huge repair and replacement costs, not the state.

[Simpo Two]

Jon39 said:

Speaking of similar political changes, are you looking forward to the water industry being nationaised again?
Unlike before, to bring about any improvements, presumably priority will be given this time, for tax payers' money to be spent on the out of sight water supply and sewerage engineering infrastructure, instead of the usual (vote winning) schools and hospitals. -
Mrs Thatcher moved the whole industry, because hardly any state money had been allocated to that industry for years, and she wanted private investment to pay the huge repair and replacement costs, not the state.

Well, I'm prepared to pay for water, either to a private company or to the State, but not to both. So we need to consider which is worse - spending excess money making layers of directors and shareholders rich, or watching the State waste equal sums with incompetence.

[Jon39]

Simpo Two said:

... Funny that an allowance would be introduced in 2016 then effectively eliminated so soon afterwards.
Thanks Rishi. Bring back Boris.

That 2016 introduction was not an improvement for all.

Some only then began paying tax on dividends received, if they totalled more than that allowance.
As usual, the tax collecting gradually increased by affecting more people, because the allowance was steadily decreased.

(Goes upstairs to fetch records).

Tax rates on dividend income:
Basic Rate: 8.75%
Higher Rate: 33.75%

Dividend allowance
6 April 2024 to 5 April 2025 £500
6 April 2023 to 5 April 2024 £1,000
6 April 2022 to 5 April 2023 £2,000
6 April 2021 to 5 April 2022 £2,000
6 April 2020 to 5 April 2021 £2,000
6 April 2019 to 5 April 2020 £2,000
6 April 2018 to 5 April 2019 £2,000
6 April 2017 to 5 April 2018 £5,000
6 April 2016 to 5 April 2017 £5,000

[Jon39]

Simpo Two said:

Well, I'm prepared to pay for water, either to a private company or to the State, but not to both. So we need to consider which is worse - spending excess money making layers of directors and shareholders rich,
or watching the State waste equal sums with incompetence.

Not sure when the private water companies were originally nationalised, but it continued until the 1980s.

Don't worry about the State wasting 'equal sums with incompetence'.
When it was nationalised, schools and hospitals always took Treasury priority (you don't win votes replacing out of sight underground pipes), so no money was even spent on the water infrastructure.

Those silly Victorians failed to use plastic pipes, so they got the blame for all the rusty metal pipe mains bursts, which became quite frequent in the 1950s and onwards. Don't here about such incidents very often these days.
Swimming in the sea was not recommended in the 1950s.