Budget 2017: Tax-free dividend allowance to be slashed
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MSE_Luke
Posts: 295 MSE Staff
The tax-free dividend allowance is to be cut from £5,000 to £2,000 from April next year, the Chancellor has said...
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'Budget 2017: Tax-free dividend allowance to be slashed'
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'Budget 2017: Tax-free dividend allowance to be slashed'
Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
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As far as I am concerned it's actually a tax on my savings, because interest rates were so low, I moved to shares, so I will be hit by this. Luckily I will move a bunch into my ISA this year and at the beginning of next year, to try to reduce the effects.
But to bring in a policy and scrap it within two years is stupid. How is anybody suppose to plan anything.0 -
Assuming you are a higher rate payer you will not be much worse off anyway, due to the increase in the starting point for the high rate band (43k becomes 45k saving you tax at 32.5% on £2k of divs in 2017/18; a year later you lose the protection on £3k of divs when the allowance drops from £5k to £2k for 2018/19 (although at that point there will likely be another increase to the high rate threshold.
If you are only basic rate tax anyway your dividend tax is only increased by a max £225 because it's only 7.5% on what no longer fits in the reduced dividend allowance.
As usual there's an existing thread Reduction in Dividend Allowance?, started by the forum regulars before MSE created this one for their own article...
http://forums.moneysavingexpert.com/showthread.php?t=56147660 -
My retirement plan was for our tax free pension lump sums to be held in my wife's name as dividends were tax free for basic rate tax payers. Then plan switched to splitting between dividend generators and income generators in both names to benefit from both dividend and savings allowances.
Now it looks like we're simply stuffed. :-(I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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