The reduction of the tax-free dividend allowance from £5,000 to £2,000 will come into effect in April 2018. According to Philip Hammond Chancellor of the Exchequer, the change was made to ‘address the unfairness’ of ‘an extremely generous tax break for investors with substantial share portfolios’.
It was also to ‘reduce the tax differential between the self-employed and employed, and those working through a company, to raise revenue to invest in public services, and to ensure that support for investors is more effectively targeted.‘ It is thought that the change will affect 2.27 million individuals in 2018 to 2019; the prediction is that this will raise £930 million for the Treasury in 2021/22.
