Since 6th April 2016, the way dividends are taxed has changed. This calculator will show you how much more tax you will pay as a result.
What are the new rules?
The old system of dividend tax credits was replaced by new tax rules for the 2016/17 tax year onwards. From 6th April 2016, after including a £5,000 ‘dividend tax allowance’, dividends are taxed at 7.5%, 32.5% and 38.1% (basic, higher and additional bands). Read our concise guide to the new dividend tax rules.
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How much more tax will you pay in 2016/17?
Use our bespoke MS Excel calculator to work out how much more tax you’ll pay in 2016/17 compared to the previous year, for the same amounts of salary and dividends. Please scroll down for some important assumptions.
|2016-17 Dividend Tax Increase Calculator|
Notes and Assumptions
- This calculator has been prepared by our own accountants. Although we’ve thoroughly tested the tool, you should use the results as a guide only.
- If you make an error, simply refresh the page and start again.
- For a full breakdown of your dividend tax liability for the previous tax year, use our 2015-16 salary and dividend calculator.
- On 17th August 2015, the Government confirmed that the ‘dividend allowance’, announced during the Summer Budget, was less generous that many first thought. This allowance sits within the taxpayer’s existing tax bands, and is not an ‘extra’ giveaway after all.
- The personal allowance (the amount of income you can receive before paying any income tax) is £11,000 in 2016/17 (it was £10,600 in 2015/16). We have used these figures in our calculations – the equivalent tax codes are 1060L and 1100L.
- You lose your personal allowance when your total income exceeds £100,000 by £1 for every £2 you earn above this threshold. So, it is lost completely when you earn £121,200 (2015/16) and £122,000 (2016/17).
- The dividend tax rates for 2015/16 are 10% (basic), 32.5% (higher), 37.5% (additional), but once you factor in the 10% tax voucher, the effective tax rates are actually 0% (basic), 25% (higher) and 30.56% (additional).
- The dividend tax rates for 2016/17 are 7.5% (basic), 32.5% (higher) and 38.1% (additional).
- To keep the calculator as simple as possible, we have assumed you earn no additional income during each tax year.
- You may be eligible to claim the Employment Allowance, which refunds Employers’ NICs up to a value of £2,000 during 2015/16, and £3,000 during 2016/17. We have not included this Allowance in our calculations.