Dividend Allowance to be cut in April

14 March 2018 - From 6 April 2018, the Dividend Allowance will drop from £5,000 to £2,000.

This will affect funds and shares that pay dividends that are held outside of an ISA or a pension.

Any dividend income received above the new £2,000 a year threshold will be taxed as follows:

• 7.5% if you are a basic-rate tax payer

• 32.5% if you are higher-rate tax payer

• 38.1% if you are additional-rate tax payer

This means that ISAs will be become even more valuable and, arguably, the best way for investors to mitigate the dividend allowance cut.

ISA dividend tax upon death

Another (smaller) change from 6 April 2018 is that, upon death, dividends will remain tax-free during the estate administration process.

At the moment dividends are taxable on the estate during this period - even during the Inheritable ISA allowance process.

If you have any questions, please contact our client service team on 020 7384 7300.