A couple of weeks ago the previous Chancellor announced that the dividends tax rates are being reversed and will remain at the same rate in 2023-24. However, on 17 November the new Chancellor Jeremy Hunt announced that there would be some changes to the dividend allowance from April 2023. This change will see the dividend allowance going from £2,000 to £1,000. There will be further changes from April 2024, which will see the allowance set at £500.
What is dividend allowance?
Dividends are when profits are taken out of a company. The dividend allowance allows taxpayers a dividends allowance of £2,000 without it being taxable.
| 2023-24 | Amount taxable |
Dividend allowance | £1,000 | |
Basic rate band | 8.75% | £87.50 |
Higher rate band | 33.5% | £337.50 |
Additional rate band | 39.35% | £393.50 |