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Taxpayers set to pay thousands more with the new dividend tax
The reality of the announcement of taxation on dividends rising to 7.5% is starting to hit home for millions of UK homes.
The additional dividend tax due will be calculated as part of your self-assessment for 2016/17 covering the period from 06/04/16 to 05/04/17.
The self-assessment has to be filed on or before 31st January 2018.
What are the new dividend rules?
- Dividends falling within basic rate tax – tax at 7.5% of the dividend received is due
- Dividends falling within higher rate tax – tax at 32.5% of the dividend received is due
- Dividends falling within the additional rate of tax – tax at 38.1% of the dividend received is due but remember that for income over £100,000 your personal allowance also starts to get restricted
In all cases this means that an extra 7.5% if tax is due on dividends across all tax thresholds.
To make it worse, you have to pay out the additional dividend tax on 31st January 2018 and you have to pay an extra 50% of the dividend tax due by way of payments on account.