In his Mini-budget 2022, Chancellor Kwasi Kwarteng announced that the rate of dividend tax will be reduced to its pre-April 2022 rate from 2023. [This was reversed on 17 October 2022 by the new Chancellor Jeremy Hunt.]
Reversing the increase made last year by the previous Chancellor, from 6 April 2023, dividends will return to their previous rates as follows:
The revised dividend tax rates, which will apply across the UK, are:
|
Tax band * |
From 2023 |
Rates for |
Rates up to 2022 |
|
Basic rate |
7.5% |
8.75% |
7.5% |
|
Higher rate |
32.5% |
33.75% |
32.5% |
|
Additional rate |
38.1% |
39.35% |
38.1% |
The £2,000 Dividend allowance will continue to be available and dividends received by ISAs remain tax-free.
S.455 loan to participator tax
The rate of tax which applies to overdrawn Directors' loan accounts under s.455 CTA 2010, is directly linked to the dividend upper rate this will mean that the s.455 rate will also return to previous levels in 2023.
Useful guides on this topic
Mini-budget 2022: at a glance
A summary for SMEs and their owners
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