Do you need a tax return?
Do you know dividends are taxed differently from 6th April 2016? The UK has a complex tax system and changes to the taxation of dividends means that many people will need a tax return for the first time after April 2017.
What are the changes in interest?
- Tax will no longer be deducted at source.
- New savings allowance of £1,000 for basic rate tax payers, £500 for higher rate tax payer but no allowance available for additional rate tax payers.
- Starting rate for savings remains at £5,000 but is only available where your non savings income is below £16,000.
What are the changes in dividends?
- No tax credit.
- New £5,000 allowance for all tax payers regardless of the level of your income.
- New rates are 7.5%, 32.5% and 38.1%.
How will these changes affect you?
- If your total dividend income is below the £5,000 allowance up to 6 April 2018, there will be no tax due on your dividend income regardless of the level of your other income.
- If your dividends exceed £5,000 and your total income exceeds the personal allowance of £11,000 it is likely you will pay more tax under the new rules that you would have previously.
- For basic rate tax payers – where income was covered by the personal allowance and dividend tax credit there was no requirement to submit a tax return. If there is tax now due on your dividend income you may need to complete a tax return – if you are unsure, please get in touch.
For an example of how this works see below:
|Less tax credit||(3,000)||0|
Help with the transition
If you require a tax return for the first time, we will complete and submit your tax return for the year ended 5 April 2017 and give you confirmation of tax payable by 31 January 2018.
We currently have a special offer price of £250 +VAT but the deadline for this offer is 31 October 2017, so make sure you don’t miss out and get in touch with our team today!
Barbara McQuillan – Partner
Email: firstname.lastname@example.org or tel: 0131 226 0200
Lucy Crow – Manager
Email: email@example.com or tel: 0131 226 0200