With effect from 6 April 2016 the UK government will remove the Dividend Tax Credit and replace it with a new tax-free dividend allowance of £5,000 a year for all taxpayers. . Each individual’s liability to pay tax on dividends will depend on their earning and tax allowance and will be calculated by self-assessment.
The main difference will be for investors receiving between £5,000 and £10,000 in dividend income as they may have to complete a self-assessment for the first time. Those with dividend income of more than £10,000 per annum are already required to self-assess.