Another increase in Dividend tax from 2018-19

  • by Carole Jordan
  • 16 Mar, 2017
Budget 2017 increase Dividend tax
In his Budget 2015 the chancellor George Osborne changed the basis of dividend tax and increased tax on business owners with effect from April 2016. Now dividend tax is seeing a further increase!

Current year (2016/17) dividends will attract tax after a zero rate on the first £5,000

Basic rate - 7.5% (between £11,000 and £43,000)

Higher rate - 32.5% (between £43,001 and £150,000)

Additional rate - 38.1% (over £150,000)

Tax Year 2017/18 dividend tax rates after zero rate on £5,000

Basic rate - 7.5% (between £11,500 and £45,000)

Higher rate - 32.5% (between £45,001 and £150,000)

Additional rate - 38.1% (over £150,000)


In the Spring Budget 2017 the chancellor Phillip Hammond reduced the zero band for dividends to £2,000 with effect from April 2018. 

This reduction in the zero rate band will increase tax on business owners who take dividends by £150, £975 and £1,143 respectively. 

The purpose of these changes is to discourage incorporation for tax purposes and indeed will cause the smallest businesses to question if the added administration costs of a Limited Company are worth it for other reasons such as the limited liability, presentation and transferable ownership. 

Contact us if you are concerned about how to take your drawings in future. You may also be considering whether your business should operate as a Limited Company or an unincorporated business such as a sole trader or partnership. You can call us on: 01273 882200 or email us at: info@businessheads.co.uk.


All details above were correct at the time of publishing - for more up to date information please   get in touch .

You might also be interested in...

If you enjoyed the blog, why not leave us a comment, or share it with a friend...

Free advice delivered to your inbox

Browse our other blog posts...

Our latest blog

by Carole Jordan 20 Nov, 2017

In response to a request from one of our readers I’m going to address losses, which occur in a business on a regular basis for a variety of reasons.

by Carole Jordan 13 Nov, 2017

There are proposals to reduce the VAT registration limit to capture more small businesses and increase tax revenue. 55% of small businesses are below the VAT threshold. Find out how you could be effected.

by Carole Jordan 06 Nov, 2017
It's time for the final part of our business story blog series! This week we're talking about what the equity on your balance sheet means for your business.
by Carole Jordan 30 Oct, 2017

Time for part 3 of your business story blog series! This time we'll be talking about the result of your profit and loss account - the balance sheet!

by Carole Jordan 23 Oct, 2017

This is a series of blogs to help you understand and analyse your business by understanding your accounts better. This week we're talking overheads and what your net profit figure means.

More posts
Share by: