Investment - Articles - Investors cheered as dividend tax thresholdi suspended

 “The new dividend tax threshold was intended to level the playing field between the employed and the self-employed – alongside the proposed increase in Class 4 National Insurance, which was also scrapped. But an unintended consequence of the new threshold was that it would have penalised those who are using dividends to fund their retirement.

 “A significant number of our customers have portfolios over £50,000 that are not being held within a tax efficient wrapper such as an ISA. These are not company directors paying themselves through dividends – many are pensioners who turned to investing because interest rates were so low. They could have seen their tax liability increase by hundreds or possibly thousands as a result of the new allowance. Taken across the industry as a whole we estimate there are around 90,000 investors who would have been affected.

 “Indeed, when we recently surveyed investors on what they want the political parties to promise in the election, 44% said they wanted the cut in the dividend tax allowance to be reversed. Many investors will therefore be cheering the Government’s decision to suspend this measure – and will be hoping that it doesn’t reappear in the future.”