Managing Your Money 

Beat the dividend allowance cut

Beat the dividend allowance cut

From 6 April the amount of dividend income you can receive tax-free will fall from £5,000 to £2,000. This will affect shares and funds that pay dividends held outside tax-efficient wrappers such as individual savings accounts (Isas) and pensions. Any dividend income you receive above the new £2,000 a year threshold will be taxed at 7.5 per cent if you are a basic-rate taxpayer, 32.5 per cent if you are a higher-rate taxpayer or 38.1 per cent if you are an additional-rate taxpayer. So, for example, if you have investments of around £55,000 or more yielding a typical 3.5 per cent outside a pension or Isa, they will be taxed at these levels. 

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