The Government will increase taxes on dividends by 1.25% starting from April 2022 to help fund wider investment into the NHS through a new 1.25% Health and Social Care Levy.
‘The move means that anyone taking home more than £2,000 a year in dividends will now face a slightly higher bill. At £10,000 of dividends this equates to £100 a year more, regardless of your tax bracket, while at £20,000 a year it means an extra cost of £225.’
Today’s news brings into sharp focus the importance of investing through tax efficient schemes like ISAs and SIPPs (self-invested person pensions) where dividends are shielded from tax.
The Government said it estimates that around 60% of individuals with dividends outside of ISAs will not be affected by the changes.
