New higher dividend tax rates which apply from 6 April 2016, If you’re a director shareholder who takes a large part of your income as dividends, you’ll feel the effect of the new rates more than most. To make it worse, HMRC is trying to collect the extra tax sooner than it would otherwise be due.
Tax on dividends is usually payable as part of your self-assessment bill on 31 January following the end of the tax year. However, HMRC is making adjustments to some director shareholders’ code numbers to increase the PAYE tax on their salary as an alternative way to get its hands on the extra dividend tax sooner.
HMRC has recently started sending out tax codes for 2016/17. If you’ve received one and it shows a figure for dividend tax, consider asking for it to be removed from your code.
You can write to HMRC, but it’s quicker to phone its helpline on 0300 200 3300.
