From next April the government will create a new, UK-wide, 1.25 per cent Health and Social Care Levy with dividends tax rates increasing by 1.25% points..
By increasing dividends tax rate the government is asking better-off business owners and investors to make a fair contribution.
Dividend tax is charged on taxable dividend income an individual receives that falls outside of the personal allowance (£12,570 in 2021-2022) and the dividend allowance (£2,000 in 2021-2022). Taxable dividend income excludes dividends on assets held in ISAs.
Due to a combination of the £2,000 tax-free dividend allowance and the personal allowance, around 60 per cent of individuals with dividend income outside of ISAs are not expected to pay dividend tax and are not expected to be affected in 2022-23.