ATT has expressed serious concern that the £5,000 tax free dividend allowance is in fact not a complete exemption to tax but will instead sit within the normal basic and any higher rate tax bands of the taxpayer. The ATT has warned that this is likely to come as a huge surprise to taxpayers with dividend income who had been under the impression that the allowance was significantly more generous.
Michael Steed, president of the ATT, commented: ‘The Chancellor announced the dividend allowance as a positive measure for taxpayers but underneath it all it now appears to be designed as a tax raising measure. Shareholders in family companies in particular may well feel that this is a tax increase by the back door. Those who see the Income Tax Lock as fairly meaningless will feel justified in their scepticism. Although this measure is intended to come in from 6 April 2016, there has been no prior consultation and draft legislation is yet to be published.
‘The Dividend Allowance factsheet published on GOV.UK includes a few examples but they are of a simplistic nature and in no way address the major impact that this will have for example on company directors who receive both salary and dividends. The limited examples provided in the factsheet suggest that some basic rate taxpayers may well have to pay more tax than under the current system whilst some higher rate taxpayers may actually pay less than at present.’
HMRC’s Dividend allowance factsheet was published on 17 August, as reported last week in Tax Journal news.
ATT has expressed serious concern that the £5,000 tax free dividend allowance is in fact not a complete exemption to tax but will instead sit within the normal basic and any higher rate tax bands of the taxpayer. The ATT has warned that this is likely to come as a huge surprise to taxpayers with dividend income who had been under the impression that the allowance was significantly more generous.
Michael Steed, president of the ATT, commented: ‘The Chancellor announced the dividend allowance as a positive measure for taxpayers but underneath it all it now appears to be designed as a tax raising measure. Shareholders in family companies in particular may well feel that this is a tax increase by the back door. Those who see the Income Tax Lock as fairly meaningless will feel justified in their scepticism. Although this measure is intended to come in from 6 April 2016, there has been no prior consultation and draft legislation is yet to be published.
‘The Dividend Allowance factsheet published on GOV.UK includes a few examples but they are of a simplistic nature and in no way address the major impact that this will have for example on company directors who receive both salary and dividends. The limited examples provided in the factsheet suggest that some basic rate taxpayers may well have to pay more tax than under the current system whilst some higher rate taxpayers may actually pay less than at present.’
HMRC’s Dividend allowance factsheet was published on 17 August, as reported last week in Tax Journal news.
