Changes to the taxation of dividends – calculate the impact

26 January 2016

From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.

Under the new Dividend Allowance the first £5,000 of dividend income will be tax-free and you will pay tax on any dividends you receive over £5000.  We have developed a calculator to give you an indication of the impact the new Dividend Allowance is likely to have when the rules come into effect in April.

Simply enter in the two coloured data entry boxes your earned income and dividend levels to compare how the changes to the taxation of dividends taking effect on 6 April 2016 will affect your personal tax charge.

This tool is intended to give an illustration of the impact of the changes to the taxation of dividends taking effect in April 2016. However it is necessarily a simplified calculator and must not be used as a substitute for taking professional advice as to how the changes might impact your particular circumstances. Whilst reasonable care has been taken in its preparation UHY Hacker Young cannot guarantee that the tool is completely free from mistakes or anomalies and therefore accept no liability whatsoever in respect of actions taken or omitted from being taken as a result of using the tool.

The tool shows only the personal tax impact of the changes to the taxation of dividends on UK taxpayers and does not take account of any special tax rules such as those for trustees, those for non residents, those for the remittance basis of tax and so on. It does not consider National Insurance, corporation tax or any other tax, and does not comment on the suitability or otherwise of a given profit extraction method for business owners.

If you are in any doubt as to how you may be affected by these changes and whether you ought to take any action in anticipation of them you should seek appropriate professional advice.  For more information, please contact a tax expert at your nearest location.

If you are interested in finding out more about our tax services, please visit the tax section on our website.