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Dividend Tax Changes – Do You Need To File a Tax Return?
Historically, dividends paid to UK taxpayers have benefitted from a tax credit, which has meant that the tax payers who would not be higher rate tax payers would face no additional tax liability on these dividends.
However, in his 2016 Budget, then Chancellor, George Osbourne, announced that as part of what he described as a modernisation of the system of taxation of dividends, these tax credits would disappear and be replaced by a dividend allowance of £5,000 and a new series of tax rates on dividends.
Whilst some tax payers will benefit from these changes the biggest effect will see a number of “basic rate” tax payers being faced for the first time with a tax liability on these dividends.
In order to disclose this liability to H M Revenue & Customs, it will, in most cases, be necessary for taxpayers to register for Self-Assessment and to then complete a Tax Return.
The deadline for registering with H M Revenue & Customs is 5 October 2017, and Tax Returns will need to be filed by 31 January if done electronically.