In 2017/18 the first £5,000 of dividends are chargeable to tax at 0% (the Dividend Allowance). From 6 April 2018 the Dividend Allowance is reduced to £2,000. Dividends received above the allowance are taxed at the following rates:
- 7.5% for basic rate taxpayers
- 32.5% for higher rate taxpayers
- 38.1% for additional rate taxpayers.
If you own your own company and haven’t yet had the benefit of your dividend allowance for 2017/18 consider whether declaring a dividend prior to 5 April 2018 in order to use the allowance would be appropriate. This of course is subject to your company having sufficient retained profits to declare a dividend. For more information on how to declare a dividend please see the cover article in our Spring Newsletter.
Internet links: GOV.UK spring statement 2018 GOV.SCOT Scottish income tax
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