Who is likely to be affected
Individuals who pay tax on their dividend income.
General description of the measure
This measure increases the rates of Income Tax applicable to dividend income. Currently the ordinary rate, upper rate and additional rate are 7.5%, 32.5% and 38.1% respectively. This measure increases each rate by 1.25% to 8.75%, 33.75% and 39.35% from April 2022.
Background
Since April 2016, the rates of Income Tax applicable to dividend income have been 7.5%, 32.5% and 38.1% for basic, higher and additional rate taxpayers respectively. Any individual who has dividend income can benefit from the dividend allowance which has been set at £2,000 since April 2018.
Impact on Individuals
Individuals who receive dividend income and pay tax on that income will be affected. The average loss of those affected is around £335. Shares held in ISAs are not subject to dividend tax.