Can dividend be taxed as income for individuals?

Jeremy535897

Dividends are subject to the 1.25% levy introduced by the government for 2022/23, which for that year is lumped in with NI.

prowla

Jeremy535897 said:

Dividends are subject to the 1.25% levy introduced by the government for 2022/23, which for that year is lumped in with NI.

Thanks for correcting me on that!

(Post amended.)

Dazed_and_C0nfused

But only for 3 of the 4 rates.

The 0% band remains 0%.

PaulJL

To the OP, you talked about dividends from a FTSE company as opposed to a director from a company paying himself dividends. I might be wrong but I didn't think there was a difference in terms of tax liability??

My understanding is that the tax rate on dividends is different but the amount of tax paid depends on your income tax band. 

For example, the basic rate of tax is 20% on income from £12571 to £50270. But the dividend tax rate up to £50270 is 8.75%.

So for example, if you had an income of 50k from dividends only, then the first £2000 would be tax free (dividend allowance) and then you would pay 8.75% on the next 48k - so your overall tax bill would be £4200.

Grumpy_chap

PaulJL said:

To the OP, you talked about dividends from a FTSE company as opposed to a director from a company paying himself dividends. I might be wrong but I didn't think there was a difference in terms of tax liability??

My understanding is that the tax rate on dividends is different but the amount of tax paid depends on your income tax band. 

For example, the basic rate of tax is 20% on income from £12571 to £50270. But the dividend tax rate up to £50270 is 8.75%.

So for example, if you had an income of 50k from dividends only, then the first £2000 would be tax free (dividend allowance) and then you would pay 8.75% on the next 48k - so your overall tax bill would be £4200.

That ignores the individual still has personal allowance.