As Duncan Heenan pointed out to me in a letter, while the chancellor presented the move as a way to prevent company owners avoiding tax by paying themselves in dividends rather than salary, plenty of retail shareholders will be affected, too. "Hardly what Mrs Thatcher had in mind when she encouraged the 'share owning democracy'", he says - and not entirely consistent, if one takes his point to its logical conclusion, with the recent reforms towards more self-directed pensions provision, essentially discouraging the accumulation of large equity portfolios that might be able to part-fund retirement.
An email I received from another reader, Mr White, provides one such example. He tells me that his elderly mother sold her house in late 2013 for £500,000 to pay for her London care-home costing £50,000 a year. To offset this enormous cost Mr White's mother bought 10 blue-chip shares and investment trusts with an average dividend yield of 4 per cent - or £20,000 of annual income, well beyond the new £5,000 tax-free allowance. "The correct strategy would have been to change the tax rules for dividends from companies not listed on recognised stock exchanges", he argues.
It's possible - but we can't say for certain - that Mr White's mother won't be worse off. But he's also concerned that the reform could have a distorting effect on the market as a whole, encouraging private shareholders to shun relatively cautious investment into income-producing equities and to instead pile into what he describes as "risky go-go shares". I'm less worried by this - if anything the new allowance will make income shares more attractive to those looking for better returns than bank accounts offer, because it's highly likely that most won't be generating more than £5,000 of dividend income a year. Given the importance of reinvested dividends in growing long-term returns, that's arguably more of a good thing for those of us who would like to further Thatcher's vision of a share-owning democracy than incentivising investment in risky growth shares.
Income-hungry investors may have other market distortions to worry about, though. Research from Markit suggests that a significant number of companies will bring forward distributions to beat the dividend tax change in April 2016 - that sounds good in principle, but investors will need to be on their guard to avoid shares that look more attractive as a result of artificially inflated payouts than they actually are. And the distorting effects that quantitative easing has had on bond prices means equities with bond-like characteristics have been bid up, too - so-called 'bondification'. We should be especially watchful of such share prices when interest rates begin to normalise.
