Recent figures from HM Revenue & Customs (HMRC) make interesting reading for savers who have shown thrift and prudence, with taxes on savings and dividends set to top £24bn in 2023/24.
Savers hit hard…
More savers have been drawn into paying tax by crossing the Income Tax savings threshold. Interest earned on savings is only tax-free up to a maximum of £1,000 a year for basic rate taxpayers and £500 for those paying the higher rate. HMRC is expected to raise £6.6bn from savers in 2023/24, which is more than five times higher than two years ago.
.. and those receiving dividends
Individuals who rely on dividends as a primary source of income or who own significant dividend-paying stocks have also been hit, with the annual Dividend Allowance having been halved in April 2023, and due to halve again in April 2024. The take on Dividend Tax is set to increase by almost £2bn to £17.6bn this tax year.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.