Draft Finance Bill 2016 – Dividend allowance and dividend nil rate; abolition of dividend tax credits, etc.
LITRG has responded to the HMRC consultation document on draft legislation to introduce a new dividend allowance and dividend nil rate for the first £5,000 of an individual’s dividend income and to abolish the dividend tax credit. It will take effect from 6 April 2016.
The LITRG response notes that for individuals with modest amounts of dividend income, the legislation will probably simplify their position. However, it will cause additional complexity for some. In particular, some individuals will find themselves within self assessment for the first time and will need to notify HMRC of their dividend income.
LITRG calls on HMRC to ensure that they provide clear guidance. In addition, we ask HMRC to carry out a pro-active communications campaign to draw people’s attention to the changes. It is important that taxpayers understand what the changes mean for them and what action they need to take to comply with their new responsibilities.
The consultation is available on GOV.UK.
The LITRG submission can be found here.