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An amendment in the March 2017 budget saw the amount savers can receive in dividends without paying tax cut from £5,000 to £2,000. Investors might not have spotted the change, which took effect from the 2018-19 tax year.
In the next few weeks investment houses will begin sending out annual statements of dividends received in the past financial year to their clients. With the lowering of the dividend tax band it could lead to more people having to fill in a tax return where they previously did not have to. If you receive a statement and are not sure of what it means contact one of our experienced Financial Planning Consultans for independent advice.
The dividend rate is based on your income tax level. Above the £2,000 limit, investors are taxed at 7.5% on their dividends if they are basic-rate income taxpayers, 32.5% on the higher rate and 38.1% for additional-rate taxpayers.
It is up to investors to work out how much dividend income they have received, including from individual stocks, funds of shares, or shares in a company they own.
There are ways to mitigate the amount of tax paid on dividends so it is important to speak to a Financial Planning Consultant about your circumstances and gain some professional advice.
If you receive your annual statement of dividends and you would like some independent advice, please get in touch with one of our consultants or visit our website for more information.Get in touch
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