Join our community of smart investors

How to make your investment income more tax-efficient

Think about what types of investments you hold in your Isa
November 29, 2022
  • Review your arrangements ahead of the dividend tax allowance cut
  • For many it still makes sense to prioritise holding income rather than growth assets within an Isa
  • Small business owners are particularly hit by the latest changes

It has been a rollercoaster of tax announcements for income investors over the past year. Initially, dividend tax rates were going to be cut from April 2023 onwards. Later, the measure was scrapped. Now, the divided tax allowance is being cut instead, a de facto hiking of the tax.

In his Autumn Statement on 17 November, chancellor Jeremy Hunt unveiled a series of tax increases, for a total bill of £25bn. The dividend tax allowance, which has been set at £2,000 since 2018 and was previously £5,000, will be reduced to £1,000 from April 2023 and cut again to £500 from April 2024. Dividend tax rates will remain at 8.75 per cent, 33.75 per cent and 39.35 per cent for basic, higher and additional rate taxpayers, respectively.

This is subscriber only content
Start your trial to keep reading
PRINT AND DIGITAL trial

Get 12 weeks for £12
  • Essential access to the website and app
  • Magazine delivered every week
  • Investment ideas, tools and analysis
Have an account? Sign in