Dividend Tax Payment Question

[Ebenezer]

Yes, I saw my own post.

Payments on account are not made in advance though. Not normally anyway.

There is a slightly inconvenient scenario when you take lumpy income, such as irregular dividends or push most of your earnings to the end of the tax year.

In that scenario it is possible to know you'll earn £X in a tax year and make payments on account to that effect but if you pay more than half of that income between Feb and the end of the tax year then yes technically you'll be paying some tax in January before you've earned it.

This should only be an issue if you haven't planned ahead though.

Er, this describes me exactly. Top up the whiskey and cigars fund occasionally during the year, then pay out up to the HRT threshold at the end of March. Is there an argument for revising this arrangement in light of the new rules?

In a previous life, when I had perm salary + self employed income, I used to manage this by putting aside 40% of all the "extra" income when I received it, so I'd always have the cash ready for the following year. I had been thinking of a similar arrangement (different percentage!) to cope with the new dividend tax rules.

[TheCyclingProgrammer]

Putting aside tax as you take the dividends is the best approach but as I said, if you take most of your dividends in March you'll be due to pay your first payment on account before you've taken the dividend.

If you prefer to take the dividends in bigger lumps might be better to try and take them before the end of January.