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An image of Rutton ViccajeeWhat does it all mean – investors

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.

Example

(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:

table 1 dividends blog

Rutton’s conclusion

So for the even above average investor, the change represents a better tax position than currently.
For an additional rate taxpayer the number are:

table 2 dividends blog
Rutton’s conclusion

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.