UK Dividend Tax Concerns Ahead of Upcoming Budget

Speculation is growing that Chancellor John Healey may increase dividend taxes in the upcoming Budget on October 28. Nigel Green, CEO of deVere Group, has warned that such moves could mirror the high-tax regimes of the 1970s.

Currently, dividends held outside ISAs and pensions are taxed at 10.75% for basic rate taxpayers, 35.75% for higher rate, and 39.35% for additional rate taxpayers. The tax-free dividend allowance has already decreased from £5,000 to £500 over the last decade. Green noted that because dividends are paid from profits already subject to a 25% corporation tax, higher-rate investors could see nearly 52p of every pound of profit go to the Treasury.

Additional fiscal changes are expected to impact landlords and savers. From April 6, 2027, rental profits and savings interest are scheduled to move onto separate property rates of 22%, 42%, and 47%, which are two percentage points higher than the rates applied to wages.