MSE News: Cut to tax-free dividend allowance to be shelved

Frufru23

C_Mababejive wrote: »

Sorry to open up an old debate but sums is not my strongest suit.

Now prior to the so called 5k allowance,what tax did someone pay on dividend income and was there a linkage to income tax bracket?

Essentially, did the move to the 5k "allowance" make people worse off or better off ?

Has there been a bit of smoke and mirrors going on?

Yes, there as some significant changes to dividends, this 5k allowance has only been in place for the last year. Previously they operated a somewhat complicated system of tax credits, The move to the new scheme meant that anyone taking small amounts of dividends would most likely be better off. However, if say you took your salary as part PAYE and the rest in dividends, then you'd be worse off.

The reduction of 5k to 2k would again make people worse off. It's one thing after another, which is the way the world is I guess. But then with comments from posters stating that people who take their income this way are purely tax avoiders, then I suppose the government can be confident that this group of people are easy targets as the consensus is that they have it too good anyway.

kidmugsy

eskbanker wrote: »

Who'd have thought there'd be U turns and concessions when there's a general election coming up....

Don't be so daft. They've just cut back the Finance Bill so they can get it passed before the election. The increase in probate fees has been omitted too. There is no suggestion, at least not yet, that these two things have been scrapped. There will presumably be a new Finance Bill after the election which is, I'd guess, likely to include them.

This sort of thing happens before very general election at this time of year.

eskbanker

kidmugsy wrote: »

Don't be so daft. They've just cut back the Finance Bill so they can get it passed before the election. The increase in probate fees has been omitted too. There is no suggestion, at least not yet, that these two things have been scrapped. There will presumably be a new Finance Bill after the election which is, I'd guess, likely to include them.

This sort of thing happens before very general election at this time of year.

Thanks for your kind words!

And yes, I think it's clear from the rest of the thread (including my subsequent posts) that my initial cynical reaction that it was political opportunism was misplaced and that it was a timing issue, so I'm not sure there was any need for the points you raise to be restated again when they've mostly been adequately covered elsewhere in the thread....

Sceptic001

kidmugsy wrote: »

The increase in probate fees has been omitted too.

Being pedantic, the proposed probate fee hike was nothing to do with the Finance Bill. It was being introduced by the Ministry of Justice without reference to Parliament and may have been subject to legal challenge because the "fee" was beginning to look suspiciously like a tax (which does need parliamentary approval)

dunstonh

As mentioned earlier in this thread, the Govt has confirmed that there will be a finance bill after recess covering the delayed changes and that they will apply from the 2017/18 tax year.

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-07-13/HCWS47/

redux

dunstonh wrote: »

As mentioned earlier in this thread, the Govt has confirmed that there will be a finance bill after recess covering the delayed changes and that they will apply from the 2017/18 tax year.

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-07-13/HCWS47/

Was it only a few months ago Mr H announced that this autumn statement would be the last, the next Budget would be the last spring Budget, and thenceforth the Budget would be in the autumn?

Can he really not wait 3 or 4 more months to do something that was not urgent only 3 or 4 months ago?

talexuser

He doesn't know if the government will still be there in 3 or 4 months.

jamesd

The changes are to apply from April 2017. There's some urgency about it getting both the tax increases and decreases into law as fast as practical so people can properly plan their 2017-18 actions.

eskbanker

jamesd wrote: »

The changes are to apply from April 2017. There's some urgency about it getting both the tax increases and decreases into law as fast as practical so people can properly plan their 2017-18 actions.

No, the dividend changes were always intended to apply from April 2018 and will do so (assuming they're passed into law)....

eskbanker

dunstonh wrote: »

As mentioned earlier in this thread, the Govt has confirmed that there will be a finance bill after recess covering the delayed changes and that they will apply from the 2017/18 tax year.

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-07-13/HCWS47/

What it actually says is that those changes that were intended to apply in 2017/18 will continue to do so, but changes such as the dividend allowance (i.e. the subject of this thread) were intended for 2018/19 and will apply from then, i.e. it's not bringing anything forward.