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What is Dividend Tax?

Dividend tax is the very unpopular income tax that came into effect from April 2016.  Before then tax wasn’t paid on dividends unless you were in the Higher Rate tax bracket - where you paid 25p tax for every £1 received.  From April 2016, Basic Rate Tax payers have had to pay 7.5 pence on every £1 received in dividends, and 32.5p in the £1 for Higher Rate tax payers.  If you live abroad and are non-resident you don’t pay this tax, and institutions don’t pay this tax either, but UK based owner managers of small companies do have to pay it – so it is principally a tax on small businesses.