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Budget 2015: How New '10Pc' Peer-To-Peer Isas Will Work

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Does anyone know how the new dividend tax changes will work?.

Will the £5000 allowance mean someone who has say £4000 a year in dividend income will be £400 better off than today?.

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Does anyone know how the new dividend tax changes will work?.

Will the £5000 allowance mean someone who has say £4000 a year in dividend income will be £400 better off than today?.

If basic rate taxpayers, they will merely be in the same position as currently. Clear table on the Torygraph websitehttp://www.telegraph.co.uk/finance/personalfinance/investing/shares/11726664/Budget-2015-investors-face-tax-raid-on-dividends.html

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If basic rate taxpayers, they will merely be in the same position as currently. Clear table on the Torygraph websitehttp://www.telegraph.co.uk/finance/personalfinance/investing/shares/11726664/Budget-2015-investors-face-tax-raid-on-dividends.html

I thought so but some places saying it would encourage small savers to buy shares.More reason to use the ISA allowance i guess.

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The way I read it is that the tax free £5k on dividend income comes after the tax free allowance so anything from £11k-

Does anyone know how the new dividend tax changes will work?.

Will the £5000 allowance mean someone who has say £4000 a year in dividend income will be £400 better off than today?.

Do you mean the current 10% charge will not apply if below £5k? I hope so.

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The way I read it is that the tax free £5k on dividend income comes after the tax free allowance so anything from £11k-

Do you mean the current 10% charge will not apply if below £5k? I hope so.

What about the 10% notional tax credit? Because of it, currently basic rate taxpayers effectively don't pay any tax on dividends.

As from April 2016 the tax credit is done away with, so all dividend income will be treated as gross, untaxed income.

The upshot is, on anything above the £5,000 tax-free allowance, there'll be an extra £75 in tax to pay on every £1,000 compared with this tax year.

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£5k is quite a lot of dividend interest. Osbourne spoke of portfolios typically in excess of £140k in his speech. The £140k is what would generate £5k dividend income at the FTSE average.

Now, you could certainly have a £140k portfolio while being well below the UK average. But to have it all in shares and none of them in a tax shelter such as an ISA or SIPP would seem perverse and unlikely. It's likely to be the pretty-seriously-rich who pay this tax. While some of us might be able to benefit from it.

Edited by porca misèria

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What about the 10% notional tax credit? Because of it, currently basic rate taxpayers effectively don't pay any tax on dividends.

As from April 2016 the tax credit is done away with, so all dividend income will be treated as gross, untaxed income.

The upshot is, on anything above the £5,000 tax-free allowance, there'll be an extra £75 in tax to pay on every £1,000 compared with this tax year.

The whole point of this is to have an effect on single Director contractors personal service companies (Ltd companies) who for years have been paying themselves a small salary (under the tax and NI) threshold and the rest of their income in dividends. So they just pay corporation tax at 20% and then anything else they pay in the above way. The government have been losing a lot of money this way and they have failed to have any effect with IR35, this cIrcumvents it and makes working through a psc less attractive (but still better than PAYE for most).

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The whole point of this is to have an effect on single Director contractors personal service companies (Ltd companies) who for years have been paying themselves a small salary (under the tax and NI) threshold and the rest of their income in dividends. So they just pay corporation tax at 20% and then anything else they pay in the above way. The government have been losing a lot of money this way and they have failed to have any effect with IR35, this cIrcumvents it and makes working through a psc less attractive (but still better than PAYE for most).

Going to be looking at IR35 as well. Two paragraphs in the full budget document

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443232/50325_Summer_Budget_15_Web_Accessible.pdf

"1.180 The government recognises that many individuals choose to work through their own limited company. However, where people would have been employees if they were providing their services directly, anti-avoidance legislation commonly known as IR35 introduced in 2000 requires that they pay broadly the same tax and National Insurance as other employees. As highlighted by reports from the Office of Tax Simplification and the House of Lords, it is clear that IR35 is not effective enough. Non-compliance in this area is estimated to cost over £400 million a year.

1.181 The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 legislation. The government wants to find a solution that protects the Exchequer and improves fairness in the system."

And looking at tax relief on travel and subsistence expenses

"2.165 Reviewing the rules for tax relief on travel and subsistence expense – As announced at Budget 2014, following a report by the OTS, the government will review the rules underlying the tax treatment of travel and subsistence expenses. A discussion paper will be published shortly outlining a potential framework for new rules."

Edit: formatting

Edited by Snugglybear

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