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    • Grace Beyler
    • By Grace Beyler 13th Mar 17, 11:11 AM
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    Grace Beyler
    Change in dividend tax
    • #1
    • 13th Mar 17, 11:11 AM
    Change in dividend tax 13th Mar 17 at 11:11 AM
    Hammond has reduced the amount of tax free income from dividends from £5000 to £2000. I have annual dividend payments which well exceed £200,0 but my overall income does not exceed the limit of £11,500. Will the dividend income amount over £2000 be subject to tax even though, when it is included in my total income, does not exceed the personal allowance?
Page 1
    • bowlhead99
    • By bowlhead99 13th Mar 17, 11:21 AM
    • 6,194 Posts
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    bowlhead99
    • #2
    • 13th Mar 17, 11:21 AM
    • #2
    • 13th Mar 17, 11:21 AM
    No, if the total income you're getting is lower than the threshold for paying any UK tax on any income, you didn't need any kind of special allowance for dividends because there wouldn't be any tax on them anyway.

    Although, if the dividend allowance is reduced and you have to rely more on your standard annual personal allowance to take the income tax free, it does leave less spare capacity in that personal allowance to do other useful things like get some employment income or pension income, give some of the allowance to a spouse etc.


    Note the reduction to £2000 is not due to come in until April 2018 so you have some time to move some of the shares that generate these dividends into ISA or pension anyway (assuming they're not shares in private companies)
    Last edited by bowlhead99; 13-03-2017 at 5:10 PM. Reason: typo in date
    • BJV
    • By BJV 13th Mar 17, 11:26 AM
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    BJV
    • #3
    • 13th Mar 17, 11:26 AM
    • #3
    • 13th Mar 17, 11:26 AM
    Not happy that they have yet again changed the dividend allowance but not surprised it was always a way to take money out of a business. So it is logical that HMRC want their pound of flesh.

    Just wish that they would spend as much time chasing the mega conglomerates which pay almost nothing???
    Happiness, Health and Wealth in that order please!
    • bowlhead99
    • By bowlhead99 13th Mar 17, 2:29 PM
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    bowlhead99
    • #4
    • 13th Mar 17, 2:29 PM
    • #4
    • 13th Mar 17, 2:29 PM
    Just wish that they would spend as much time chasing the mega conglomerates which pay almost nothing???
    Originally posted by BJV
    I suspect they do, spend rather more time and resources on that than they did on deciding to change the £5k allowance to £2k.

    It is rather more challenging to convince mega global conglomerates to reallocate their global profits to create more net taxable income in the UK and less to elsewhere, especially when 'elsewhere' has a lower tax rate than the UK.

    Things like the OECD BEPS initiative and country-by-country reporting will help, but it has to be coordinated with lots of global governments to make it work. And you could presume perhaps that if a global conglomerate wants to make £x or $y of profits after tax each year for its shareholders and the overall corporation tax bill goes up, that's not going to be particularly fun for the prices of goods.

    The last referendum said that the people didn't want the UK to be part of things like the EU (wherein we are signed up to initiatives such as the Directive on Administrative Cooperation on tax affairs and automatic exchange of information between governments and financial institutions) because our people and businesses shouldn't have to be in scope of burdensome rules set at an international level that we can't fully control. So, the ol' "careful what you wish for" comes to mind.

    But overall I'm sure that the government and HMRC between them did spend more time on such initiatives over the last couple of years than they did on flipping the switch to create a small change in the level of tax paid on unwrapped dividends by a small minority of individuals each year.
    • xylophone
    • By xylophone 13th Mar 17, 2:59 PM
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    xylophone
    • #5
    • 13th Mar 17, 2:59 PM
    • #5
    • 13th Mar 17, 2:59 PM
    note the reduction to £2000 is not due to come in until april 2008
    2018........
    • kidmugsy
    • By kidmugsy 13th Mar 17, 4:42 PM
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    kidmugsy
    • #6
    • 13th Mar 17, 4:42 PM
    • #6
    • 13th Mar 17, 4:42 PM
    For many people it'll hardly matter. Their personal allowance has just increased by £500 to £11,500; by 2020 it is to reach £12,500. The higher rate threshold has increased from £43k to £45k, and is to reach £50k by 2020.
    • Grace Beyler
    • By Grace Beyler 13th Mar 17, 7:34 PM
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    Grace Beyler
    • #7
    • 13th Mar 17, 7:34 PM
    Further to the above ...
    • #7
    • 13th Mar 17, 7:34 PM
    ...am I correct in assuming that in the current tax year 2016/17, I can have £5000 of share dividends tax free IN ADDITION TO to my personal allowance (currently £11,000)? That dividend allowance reduces to £2000 in 2018.
    • Dazed and confused
    • By Dazed and confused 13th Mar 17, 7:41 PM
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    Dazed and confused
    • #8
    • 13th Mar 17, 7:41 PM
    • #8
    • 13th Mar 17, 7:41 PM
    Pretty much, it isn't really a £5000 tax free allowance like the personal allowance is tax free but is actually £5000 taxed at 0%.

    No difference for most people but there are some with particular types and amounts of income where it becomes more complicated.

    Impossible to say if this affects you without more info about your own income
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