From April 2022, there will be a 1.25% increase in NICs on earned income, with dividend tax rates also increasing by 1.25%. Announced last year and confirmed recently, the money raised will be ringfenced for health and social care costs.
Many of our clients will be affected by the increase in the dividend tax.
The dividend tax is applicable on dividend income above the frozen £2,000 dividend allowance and above the £12,570 personal allowance. Dividends on assets held in ISAs are excluded from the dividend tax.
From the 2022-23 tax year, basic rate dividend tax will be charged at 8.75% instead of the current 7.5%. Higher rate dividend taxpayers will be charged 33.75% instead of 32.5% and additional rate dividend taxpayers will pay 39.35% instead of 38.1% respectively.
Please contact us to arrange your personalised dividend planning review, so that we can make sure you extract money in the most tax-efficient way possible.
This will need to be done before 5 April, so the deadline for the reviews with us is the 18th of March 2022.
Select a suitable date and time for your review by booking a session with Barry in his calendar here.