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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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As a 74 year old pensioner heavily reliant on share dividends

Resolved Question:

As a 74 year old pensioner heavily reliant on share dividends to enhance the state pension, I am concerned by the proposed changes to the taxing of company dividends.I am not a company owner so am unable to pay myself a special dividend as many are doing, and I am wondering if there are any known proposals in the pipeline for relief to taxpayers in my position?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Can you tell me how much you receive in state pension and dividends annually please.
Customer: replied 1 year ago.
Total nett pension 14/ 15 Tax Year £7908.68. Nett dividends 14/15 £27,389.95
Expert:  TonyTax replied 1 year ago.
Thanks. Leave this with me while I draft my answer.
Expert:  TonyTax replied 1 year ago.
If you receive £8,340 (my estimate) in state pension in 2016/17 and £27,389 in dividends, your total income will be £35,729. The personal allowance will be £11,000 and the first £8,340 will be used against your state pension so you will be liable for tax on £24,729 of your dividends.The first £5,000 of dividends will be taxed at 0% and the balance of £19,729 will be taxed at 7.5% so you will have a tax liability of around £1,479.68 for 2016/17. You will probably need to register for self-assessment as there is no other way to have the dividend tax assessed.I'm not aware of any proposed reliefs due to the introduction of the new dividend tax I'm afraid, though the first £5,000 will be taxed at 0%. The last chance for any changes will be in the March Budget and I know that there have been representations made to the government. I'll be surprised if anything changes.I hope this helps but let me know if you have any further questions.
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