From 6 April 2016, the Dividend Tax Credit has been replaced by a new tax-free Dividend Allowance, meaning there will be an income tax charge on dividends at the rate of 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
The long-standing system of tax credits attached to dividends has been replaced with a new tax-free Dividend Allowance. This means that there will be no tax to pay on the first £5,000 of dividend income, no matter what non-dividend income a shareholder may have. Dividends paid on shares held within pensions and ISAs are unaffected, remaining tax-free.
Non-taxpayers and basic rate taxpayers who receive dividend income between £5,001 and £10,000 will need to make a declaration for the first time. Individuals with dividend income of more than £10,000 are already required to be in Self Assessment. Most of those individuals who will have some tax to pay on dividend income will have it collected by PAYE.
You may notice some changes to the information presented in your Pearson Dividend Confirmation document. If you have any queries regarding that information, please contact our registrar, Equiniti, on 03713842043*(UK callers)
+44 (0)121 415 7062 (non-UK callers)
*Telephone calls to these numbers are currently charged at 10p per minute plus your phone company's access charge. Other telephone service providers may charge different rates. Lines are open 8.30 to 5.30 Monday to Friday (excluding UK public holidays).
Further information is available from HMRC’s website. Please go to: