dividend tax rates.

[2uk]

Informed by the accountant the div rates are 10 % . Not sure the rate for the higher tax payer. Couldn't even find it on the HMRC site. Not that I care too much , it is just I am really mad about their site and its complexity.

[boxman]

Think you'll find it's a further 32.5% to pay for higher rate tax payers but no NI of course.

[THEPUMA]

The effective rates are nil if you are not a higher rate taxpayer and 25% of the amount received if you are a higher rate taxpayer.

The published rates are 10% and 32.5% but once you have taken into account the tax credit (which is a figment of HMRC's imagination), the effective rates are as above.

[pickle]

The effective rates are nil if you are not a higher rate taxpayer and 25% of the amount received if you are a higher rate taxpayer.

The published rates are 10% and 32.5% but once you have taken into account the tax credit (which is a figment of HMRC's imagination), the effective rates are as above.

The tax credit has the effect of lowering the threshold at which you become subject to higher rate income tax. ie the 40% threshold is lower for dividends than it is for salary.

[Bluebird]

The effective rates are nil if you are not a higher rate taxpayer and 25% of the amount received if you are a higher rate taxpayer.

The published rates are 10% and 32.5% but once you have taken into account the tax credit (which is a figment of HMRC's imagination), the effective rates are as above.

isn't the 32.5% reduced to 22.5% rather than 25% ?

[THEPUMA]

isn't the 32.5% reduced to 22.5% rather than 25% ?

It's 25% of the amount received, which would be 22.5% of the gross so for example:-

Dividend received £9,000 => tax credit £1,000 => gross dividend £10,000.

Tax rate if higher rate taxpayer = 32.5% => £3,250 liability - £1,000 tax credit = £2,250 residual liability.

£2,250 = 25% x £9,000 (= 22.5% of £10,000)