Page 5 - Growth Plan Newsletter

The tax rates applicable to dividends will be reduced by 1.25 percentage points for 2023/24 onwards, removing the
2022/23 increase which will operate for the current tax year only. The relevant dividend tax rates (above the frozen
£2,000 dividend allowance) are thus:

BASIC RATE HIGHER RATE ADDITIONAL RATE

2022/23 8.75% 33.75% 39.35%

2023/24 7.50% 32.50% N/A

PLANNING POINTS

One side effect of inflation has been and will be to reduce the real value of the ISA investment limit,
which was last increased (to £20,000) in April 2017 and is not scheduled to rise again until April 2026.
That inflationary erosion makes it all the more important to maximise the ISA limit each tax year.
Remember, there is no UK tax on dividends, interest and capital gains generated by ISA investments.

Beyond the ISA its worth remembering that the dividend allowance cannot be carried forward if unused.
It can deliver a useful addition to tax free investment income. For example, if a share portfolio held
directly or through a collective investment yielded 3% pa, an investment of £65,000 would produce
completely tax-free income in addition to whatever your ISA and Venture Capital Trust investments
produce by way of tax-free dividends.

If you are a shareholding director in a private company you will need to factor in the proposed changes
to national insurance, income tax and dividend taxation when deciding how to most tax efficiently take
money from your company. Advice will be essential.

Stamp Duty Land tax

Revisions to SDLT (which applies in England and Northern Ireland) were widely expected, but the changes announced,
effective from 23 September 2022, proved to be hardly radical:

• The 0% slice increases from the first £125,000 to the first £250,000 of value, removing the 2% band entirely
and giving a potential tax saving of up to £2,500.

• For first time buyers only, the 0% band is extended from the first £300,000 to the first £425,000, subject to
the property being worth up to £625,000 (previously £500,000). The potential maximum saving here is
£11,250, although it is worth noting the average UK first time buyer is currently paying under £230,000 for
their home, according to Nationwide.

Rate Pre-23/9/22 23/9/22 On
0% Up to £125,000* Up to £250,000
+
2% £125,001-£250,000* N/A
5% £250,001-£925,000* £250,001-£925,000
10% £925,001 - £1,500,000 £925,001 - £1,500,000
12% Over £1,500,000 Over £1,500,000

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