You currently have JavaScript disabled. This site requires JavaScript to be enabled. Some functions of the site may not be usable or the site may not look correct until you enable JavaScript. You can enable JavaScript by following this tutorial. Once JavaScript is enabled, this message will be removed.

Why choose HGH?

Taxation of dividend income from 6 April 2016

Posted: 28th Aug 2015 by Robert Salenius Taxation

Taxation of dividend income from 6 April 2016

From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.

The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have.

You’ll pay tax on any dividends you receive over £5,000 at the following rates:

7.5% on dividend income within the basic rate band

32.5% on dividend income within the higher rate band

38.1% on dividend income within the additional rate band


Say you take £8,000 in salary and £40,000 in dividends from your company:



Salary 8,000 8,000
Dividend income 40,000 40,000 
Plus tax credit 4,444
  52,444 48,000
Less : Pers allowance


Taxable income



Tax at

10% on

31,785 3,178 0% on 5,000 0

32.5% on

10,059 3,269 7.5% on 27,000 2,025
Less tax credit 4,184 32.5% on 5,000


Tax due     2,263      


So, you now have extra tax to pay in 2016/17 of £1,387.

We shall be taking a closer look at our corporate clients in view of these changes.

If you would like to discuss this issue further please do not hesitate to contact us:

Email:,, or call 01904 655202.