Dividends – from 6 April 2016
From 6 April 2016 the law on the taxation of dividend income is changing. You will not need to pay tax on the first £5,000 of dividend income as this will be covered by a dividend allowance. Dividend income over £5,000 will be taxed at the following rates:
Basic rate tax payers: 7.5% of dividend income within the basic rate band.
Higher rate tax payers: 32.5% of dividend income within the higher rate band.
Additional rate tax payers: 38.1% of dividend income within the additional rate band.
Disposals of shares
If you dispose of your shares you may be subject to capital gains tax (CGT) if the shares are worth more than you paid to acquire them. You will be liable for tax on the total gains for the year on all chargeable assets after taking account of any losses, tax reliefs and the annual exemption.
The annual exemption for CGT in the tax year 2016/17 is £11,100.
(1) Applies to minority shareholders, defined as those holding less than 10% of the share capital of Phoenix Group Holdings.
Please note that the information above is provided as general guidance only. We recommend that you obtain professional advice if you are in any doubt about the taxation implications of your investment.