From April 2016 the Dividend Tax Credit will be
replaced by a new tax-free Dividend Allowance.
The Dividend Allowance means that you won’t have
to pay tax on the first £5,000 of your dividend income, no matter what
non-dividend income you have.
You’ll pay tax on any dividends you receive over
£5,000 at the following rates:
7.5% on dividend income within the basic rate
32.5% on dividend income within the higher rate
38.1% on dividend income within the additional
Personal Allowance: £11,000
Basic Rate Limit: £32,000
Higher Rate Threshold: £43,000
Additional rate band:Over £150,000
Note wording of the
treaty -2. However, such dividends may also be taxed in the Contracting
State of which the company paying the dividends is a resident and according to
the laws of that State, but if the recipient is the beneficial owner of the
dividends the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the
dividends if the beneficial owner is a company which controls, directly or
indirectly, at least 10 per cent of the voting power in the company paying the
(b) 15 per cent of the gross amount of the
dividends in all other cases.