News
Dividend Taxation
27 - 04 - 2021
Are the dividends I receive taxable?
Yes.
Income tax is calculated on your total taxable income. Add your income from dividends to your other taxable income
At what tax rate are dividends taxed?
Tax Year 2021/22 Band Tax Percentage
Starting Rate £0 - £2,000 0%
Basic Rate £2,001 - £37,500 7.5%
Higher Rate £37,501 - £150,000 32.5%
Additional Rate Over £150,000 38.1%
Scottish rates and bands for dividends only will remain the same as the rest of the UK
For example:
You receive a salary of £8,632 and dividends of £20,000.
2021/22 Tax Year Calculation 2021/22
£
Salary 8,632
Dividend received 20,000
28.632
Personal Allowance 12,500
_____
Taxable Income 16,132
Does a Shareholder have to pay tax and NI?
Initially there is no tax to pay at the time of payment of the dividend.
However the dividend received by the shareholder is taxable under income tax as it forms part of the taxable income for the year.
The rate of tax payable depends on the “slice” of income the dividend represents.
|
Dividend Tax Rate |
2021/22 |
|
Basic Rate 7.5% |
£2,000 - £37,500 |
|
Higher Rate 32.5% |
£37,501 - £150,000 |
If you would like to discuss any of the issues noted above please contact us on:
01244 625 500 or 01978 364 000
contactus@foremansllp.com
Whilst all due care and attention has been taken in the preparation of these notes no liability
can be accepted for any omission or item contained therein.
Foremans LLP
April 2021
