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Dividend tax cuts


Another measure introduced during the Chancellor's statement on 23 September 2022 was that the tax rates on dividends are being reversed.


From 6 April 2022, the tax rates for Dividends and National Insurance contributions were increased, as part of a package to help fund the Health and Social Care Levy. This levy was going to be brought in to help support many UK health and social care bodies. It was expected that £5.4 billion of revenue from the Health and Social Care levy would be used to reform adult social care, and a further £1.7 billion to provide a broader system reform.


Nevertheless, the Chancellor announced the Health and Social Care Levy would be cancelled. Thus leading to a decrease in National Insurance contributions and Dividend tax rates. However, the reduction in dividends tax rates will not be in effect until 6 April 2023. This means that the ordinary dividends rate in 2022/23 is 8.75%, the upper dividend rate is 33.75% and the dividend additional rate is 39.35%.


From 6 April 2023 the dividend tax rate will be reversed, to the following rates:

Ordinary dividend rate

7.5%

Upper dividend rate

32.5%

Additional dividend rate

38.1%


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