For the last forty odd years dividends have been tax free for basic rate taxpayers.
Simple example, last tax year 2015-2016, your income was
£10,600 salary and £28,600 dividends.
How much tax will you have to pay in January 2017?
Answer: Nil. Zero tax to pay.
Let’s say this tax year (2016-2017) you have similar income
£11,000 salary (covered by tax free allowance)
and £28,600 dividends.
You now have income tax to pay on the dividends which is
£1,770.00
(Calculated as follows: First £5,000 tax free and £23,600 @ 7.5%)
This tax (personal income tax) will be payable by 31 January 2018.
