There may be tax to pay on your dividends in January 2019

The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10% notional tax credit and the introduction of new rates of tax on dividends and the dividend allowance of £5,000

For many taxpayers this meant that they had more tax to pay on their dividends on 31 January 2018. The same will also apply on 31 January 2019.

If you are a higher rate taxpayer and received £30,000 of dividends in 2017/18, £25,000 of these dividends will be taxed at 32.5%. This will result in a tax liability of £8,125, due for payment on 31 January 2019.

If we have not yet prepared your 2018 Tax Return, please let us have your tax information as soon as possible. We can then let you know how much tax you need to pay in January 2019, so that you can set aside sufficient funds. Alternatively, if you have overpaid tax, we can make any tax repayment claim for you well before Christmas.

Please note that the dividend allowance was reduced to £2,000 from 6 April 2018 and therefore it is likely that there will be even more tax payable on your dividends in January 2020.

Photo by Mike Cohen under the licence of Creative Commons Licence