Dividend tax rates to increase by 1.25% from April 2022
In a bid to level the playing field with business owners who take lower salaries and supplement their income with dividends which do not attract NIC, the government also announced an increase in dividend tax rates by 1.25% from April 2022. This will see the existing dividend tax rate on basic rate taxpayers increase from 7.5% to 8.75%, while the dividend tax rate applying to dividends above the higher rate tax threshold will increase from 32.5% to 33.75%, with those dividends over the additional rate tax threshold increasing from 38.1% to 39.35%. This represents an additional tax burden on business owners, on top of the additional employers NIC cost for their businesses.
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