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08 March 2017

Chancellor reduces tax-free dividend allowance in Spring Budget 2017

In today’s Spring Budget (8th March 2017), Philip Hammond, Chancellor of the Exchequer, announced that the tax-free dividend allowance would fall from £5,000 to £2,000 from April 2018.

 

Chris Price, Investment Specialist at Redmayne-Bentley, said:

 

“The Chancellor highlighted in his speech the “unfair discrepancy” between total tax paid by an employed worker and one who has set up their own company. To reduce this, he has proposed that the tax-free dividend for directors/shareholders allowance will fall from £5,000 to £2,000 from April 2018. This will have an impact on investors with portfolios over £60,000, as based on the approximate average yield of the FTSE 100 of 3.5 per cent, they would breach this threshold.

“However, it will encourage further investment into ISAs where the maximum investment level rises to £20,000 in April 2017, as within this wrapper there are no taxation issues.”

Please note, tax treatment depends on the specific circumstances of each individual and may be subject to change in the future.

Notes to the Editor

Established in 1875, Redmayne-Bentley is one the UK’s largest independently owned investment management and private client stockbroking firms, with 37 regional offices throughout the UK and in the Republic of Ireland.

Redmayne-Bentley has experienced commentators available for comment on personal finance and stock market issues.

Chancellor reduces tax-free dividend allowance in Spring Budget 2017
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