Policy paper

Income Tax: dividend allowance reduction

This measure reduces the tax-free allowance for dividend income from £5,000 to £2,000.



The current law for the rates of tax for dividends received by individuals is included in Chapter 2 of Part 2 Income Tax Act 2007. Section 13 sets out the main rates and section 13A provides that an amount, currently £5,000, is charged at a nil rate. Legislation will be introduced in Finance Bill 2017 to change the amount of dividend income that is charged at the nil rate by section 13A to £2,000 from tax year 2018 to 2019.

Published 8 March 2017