Tax Tip #5 PLAN FOR THE NEW DIVIDEND & PERSONAL SAVINGS ALLOWANCES
Next tax year, two new allowances will be introduced.
The Dividend Allowance – The first £5,000 of dividends you receive will be free of any personal income tax liability, regardless of your marginal tax rate. However, when the allowance is exceeded, the effective tax rates will generally be 7.5% higher than current rates.
The Personal Savings Allowance – This allowance will be £1,000 if you are a basic rate taxpayer and £500 if you are a higher rate taxpayer. If you pay tax at 45%, the allowance will not be available. The allowance covers savings income and is worth up to £200 a year in tax savings.
You should review your investments before the year end and consider who holds assets and how they are held, in order to take full advantage of these allowances next tax year.