The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10 per cent notional tax credit and the introduction of new rates of tax on dividends. For many taxpayers that means more tax to pay on dividends on 31 January each year.
If you are a higher rate taxpayer and received £22,000 of dividends in 2018/19 only £2,000 of those dividends are tax free now leaving £20,000 of those dividends to be taxed at 32.5 per cent meaning £6,500 due on 31 January 2020, and possibly payments on account of your 2020/21 liability.
If you can let us have all of your tax documents as soon as possible, we will let you know how much tax you need to pay next January so that you can set aside sufficient funds. We may also be able to suggest some tax planning ideas to reduce your tax liabilities, and help you plan for the future.
For more information and to discuss your tax affairs in further detail, contact your usual Beavis Morgan Partner.