In the 2021 Autumn Budget, HM Revenue and Customs (HMRC) announced they will be increasing tax on dividend income by 1.25%. This comes as part of the measures to help fund the costs for social care and the NHS.
This increase will come into affect from 6th April 2022. Below shows the increase impact per threshold.
| 2021/2022 | 2022/2023 | |
|---|---|---|
| Basic | 7.5% | 8.75% |
| Higher | 32.5% | 33.75% |
| Additional | 38.1% | 39.35% |
So what does this mean for you?
If we compare 2021/22 to 2022/23 and assume the same salary and dividend split, you would pay £446 more in personal tax. Full breakdown can be found below:
| 2021/22 | 2022/23 | Increase | |
|---|---|---|---|
| £ | £ | ||
| Dividends | 40,666 | 40,666 | – |
| Salary | 9,604 | 9,604 | – |
| Total Gross Income | 50,270 | 50,270 | – |
| Basic Tax Rate | 7.5% | 8.75% | 1.25% |
| Personal Tax Due | 2,678 | 3,124 | 446 |
Any further questions you have please do not hesitate to contact your accountant. Further information can be found on the GOV website here: Dividend Rate Increase.