HMRC\u2019s new dividend tax will cause complications in the 2016\/17 PAYE codes used by owners and directors.<\/p>\n
The new tax will take effect from 6 April 2016, affecting all dividends individuals receive in excess of \u00a35,000 per year.<\/p>\n
A typical company director taking home a modest salary within their personal allowance, and the remainder of their income from the firm as dividends, will pay significantly more tax in the 2016\/17 tax year than in previous years.<\/p>\n
The new dividend tax will be charged at fresh rates of 7.5% for a basic rate taxpayer, 32.5% for a higher rate taxpayer and at 38.1% for an additional rate taxpayer \u2013 as opposed to the basic tax rate of 20%.<\/p>\n
Traditionally, the extra tax would be payable by 31 January 2018 via self-assessment \u2013 as the balancing payment for that tax year.<\/p>\n
However, under the new rules, HMRC will amend the tax codes of owners and directors to automatically \u201ccode out\u201d a sum approximately equal to the amount of dividend tax due for that tax year.<\/p>\n
The deduction in the PAYE code will be clearly labelled \u201cdividend tax\u201d, but HMRC\u2019s estimated figure might not always be accurate.<\/p>\n
In order to work out for yourself whether HMRC\u2019s deduction is fair, taxpayers will need to estimate their total income tax liability for 2016\/17.<\/p>\n
Additionally, if individuals have not already paid the balance of their income tax due for the previous tax year, HMRC will add a 5% surcharge on the amount due.<\/p>\n","protected":false},"excerpt":{"rendered":"
HMRC\u2019s new dividend tax will cause complications in the 2016\/17 PAYE codes used by owners and directors.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1199"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=1199"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1199\/revisions"}],"predecessor-version":[{"id":1200,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1199\/revisions\/1200"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=1199"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=1199"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=1199"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}