Reduction to tax-free dividend allowance confirmed

You may recall Chancellor Hammond announcing in his Spring Budget that the tax-free dividend allowance would reduce from £5,000 pa to £2,000 from 6 April 2018.

However, given the amount of ‘distraction’ and rather frenzied political climate at the time, this proposed legislation was dropped at the last minute and didn’t make it into the Finance Act earlier this year.

On 8th September 2017, the latest Finance Bill 2017 was published and the reduction in the tax-free dividend allowance from £5,000 to £2,000 had made its way back in. This will affect those who receive dividends after April 2018, typically individuals who receive dividends from shares and business owners who take a combination of salary and dividends from their companies.

It might therefore be worth ensuring the full £5,000 is used by 5th April 2018 to take advantage of the current higher tax-free allowance.

To discuss your tax position and how the changes are likely to affect you, please contact [email protected] or call 01527 558539.

reduction in tax free dividend allowance