Dividend Tax Hike Hits Millions of Basic Rate Taxpayers – Guido Fawkes

Dividend Tax Hike Hits Millions of Basic Rate Taxpayers

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Reeves’ dividend tax hike has dragged millions more into payment – the majority being basic rate taxpayers. Didn’t Rachel say she wanted Brits to invest more?

Freedom of Information data from HMRC – obtained by wealth management company Quilter – shows that the Tories’ decision to cut the dividend tax-free allowance from £2,000 to £1,000 in April 2023 and down to £500 the next year has dragged millions more into payment. The number paying tax on non-ISA investment will go from 1.9 million in 2022/23 to 3.1 million in 2023/24. For the following year the figure is a whopping 3.7 million…

That is 1.3 million more additional dividend taxpayers over the two years. Reeves left the changes untouched at the last budget. HMRC forecasts say 2.2 million basic rate taxpayers had taxable dividend income and 1.1 million would owe dividend tax in 2024/25. Quilter said “the complexity of compliance is growing, particularly for those unfamiliar with the tax system. This policy seems at odds with Labour’s desire to get more people investing.” If Reeves wants people to invest she should restore the allowance, pronto…

This hits sole traders in particular. Reeves is now regularly urged to remove the £500 allowance altogether at the next budget. Good luck dealing with the fallout from that one…