Measure
The Chancellor has announced that the £2,000 nil-rate band for dividend income will be reduced to £1,000 from 6 April 2023 and reduced further to £500 from 6 April 2024.
This measure is forecast to raise over £3 billion by the end of the 2027/28 tax year.
All individuals subject to income tax on their dividend income.
As above, the nil-rate band will be reduced to £1,000 from 6 April 2023 and £500 from 6 April 2024.
As the government did not want to raise the rates of income tax or NICs in line with the Conservative Party’s manifesto pledge, introducing changes to tax thresholds was one of the revenue raising options available. This measure is expected to raise £3 billion by the end of the 2027/28 tax year.
This will result in additional income tax of up to £88, £338 or £394 for basic, higher and additional rate taxpayers who would have fully used their £2,000 dividend nil rate band, respectively from April 2023 compared to the 2022/23 tax year. Additional income tax of up to £131, £506 or £590 for basic, higher and additional rate taxpayers respectively will apply from April 2024 compared to the 2022/23 tax year.