Whilst most personal income tax rates and allowances will remain the same from 6 April 2022, the Budget confirmed an increase in the dividend tax rate. This measure will increase the rates of income tax applicable to dividend income by 1.25%. The changes will apply UK-wide.
Currently the dividend basic rate, higher rate and additional rate are 7.5%, 32.5% and 38.1% respectively. This measure will increase each rate by 1.25% to 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for additional rate taxpayers, from April 2022.
Any individual who has dividend income can benefit from the dividend allowance which has been £2,000 since April 2018. Dividends within the £2,000 allowance are not charged to tax and this will remain the case.
Trust Dividend Rate
The dividend trust rate of income tax is currently 38.1%. This will also be increased to 39.35% from April 2022 to remain in line with the additional rate.
