Dividend Declaration Before April 2023

Published / Last Updated on 03/01/2023

There is currently a £2,000 a year, 0% tax band allowance for dividend income.  This means you can receive dividends income of up to £2,000 pa with no tax to pay.  The government will reduce the tax-free Dividend Allowance from £2,000 to £1,000 from April 2023 and again down to £500 in April 2024. 

If you are an owner/shareholding director in a limited company, you should consider declaring an interim before 5th April 2023 tax year end.

Tax rates above the current £2,000 threshold (soon to be £1,000) will be taxed in the current tax year at:

  • 8.75% for basic rate taxpayers.
  • 33.75% for higher rate taxpayers.
  • 39.35% for additional rate taxpayers.

If you wait and declare a dividend after 5th April 2023, an additional £1,000 of dividends will pay tax at the above rates.  By declaring an interim dividend early (if not already done so) you could save taxes of up to £87.50, £333.75 or £395.35 respectively based on your tax band this year.

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