1st Friday
Tax Chat

Reduction in tax free dividend allowance

Reduction in tax free dividend allowance

Each individual is currently entitled to receive up to £5,000 of tax free dividends each tax year.

From 6 April 2018 the dividend allowance will reduce from £5,000 to £2,000 so it is worth making sure that you use the full £5,000 in 2017/18.

Dividends paid in excess of £5,000 are subject to income tax. The tax rates on dividends are still lower than the tax rates applied to salary, and there are no class 1 national insurance contributions to pay.

As a result, paying dividends is still likely to be more tax efficient than salary, though the difference may be lower than in previous years.

For more information, please contact Lesley Sutton on 01484 550037 or email

Share Button