JM Finn news


As covered in the autumn issue of Prospects, the Government has brought in sweeping changes to the taxation of dividends, which take effect in the new tax year, which starts on the 6th April 2016.

These changes mean that anyone receiving annual dividends in excess of £5,000 will be liable to this tax, which is payable via your annual tax return. The key points are as follows:

  • The government will abolish the Dividend Tax Credit from April 2016 and introduce a new Dividend Tax Allowance of £5,000 a year.
  • The new rates of tax on dividend income above the allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

Some clients of JM Finn & Co may have noticed this change already in your Investment Portfolio Reports, as UK dividends payable after the 5th April are already being announced in their gross form, to reflect the removal of the 10% tax credit. This can result, in some cases, in a reduced “gross income” figure quoted in your report. However, it is important to note, the actual cash amount of the dividend received will not change, it is only the tax treatment which changes.

There has been no change to the tax treatment on interest payments for Bonds and Bond Funds.

To discuss any aspect of your Investment Portfolio Reports, please contact your investment manager, however, JM Finn & Co is not permitted to give individual advice regarding taxation and therefore we would encourage you to seek specialist tax advice in relation to your own personal circumstances if you have any queries regarding the taxation on dividends. 

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