Detailed computations on the impact on small businesses organised through companies is in the next section. But here is a view of the impact on a private investor with substantial dividend income.
(All examples courtesy of Rebecca Bennyworth and used with thanks)
Peter is a higher rate taxpayer with a significant inherited portfolio of shares on which he receives dividends of £9,000 a year (net amount).
His tax position in 2015/16 and 2016/17 is as follows:
So for the even above average investor, the change represents a better tax position than currently.
For an additional rate taxpayer the number are:
Investors are better off under the new rules.
It is only where dividends represent the majority of an individual’s income (as for owners of small owner-managed companies, paying minimum salary and taking dividends) that we shall see the reverse.