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Will your income be cut by the new dividend tax?

The government claims this means ordinary investors with smaller portfolios and modest dividend income will see no change in their tax liability. According to its sums, when combined with the increases the government has made to the personal allowance and the introduction of the Personal Savings Allowance, from April 2016 individuals will be able to receive up to £17,000 of income per annum tax-free. 

Clearly that is the Governments spin on what could happen but for the majority of people over here the income they get comes from savings, investments or a pension.  So here’s the rub, the new rules will cut an additional £2.5billion out of investor’s income through tax.

At the moment basic-rate tax payers are not required to pay tax on dividends. 

But under the new rules that will change. From April 2016 all taxpayers will have a new tax-free dividend allowance of £5,000 a year. After this tax is to be charged at new rates that are 7.5 per cent higher than current levels. The overall tax rate will depend on your income tax rate band.   

If you are affected in some way by the changes outlined above, or have any questions regarding how to make the most of your money, it is well worth sparing some time to see a Financial Adviser.

Other News

NEWS WRAP – Interest Rate Debate – Trust in Growth or Manage Risk?

GraphThe latest Purchasing Managers Index (PMI) survey describes widespread growth across the UK economy, with notable upturns in the services and manufacturing sectors.

The PMI records and aggregates the strength of various sectors of the economy and is often used to predict likely changes to interest rates. The fact that data for January indicated the most significant growth in 16 months, led many pundits to speculate on the unlikelihood of an interest rate cut by the Bank of England. And they were right.

The picture of growth was supported by numerous data channels. For example, figures from Rightmove revealed a 2.3 per cent month-on-month upturn on UK house prices in January, the largest ever recorded for the month, and this assisted the annual house price rise figure to 2.7%, the largest increase since 2017.*

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Getting your numbers right

During the last political year, we have been given statistic after statistic by politicians who sound like they know what they are talking about. They can, at times, sound very convincing and even believable. But how do we know what is right and what is not?  The average person has no idea how much being a member of the EU costs per day. While even experts don’t know precisely how much the UK will save by not having to pay the EU after it exits the European Union.

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