Summer Budget 2015 Reaction: Dividend Taxation


Fundamental changes will be made to the way dividends are taxed from April 2016, which will affect many business owners who draw their income by way of dividend rather than salary. The chancellor proposes that the first £5,000 of dividends will be tax free, but thereafter, basic rate tax payers will pay income tax at 7.5%, higher rate tax payers will pay 32.5% and additional rate taxpayers will pay 38.1%. No basic rate tax credit will be given.