A shock hike in the tax on dividends is a ‘kick in the teeth’ for entrepreneurs, a wealth manager has claimed.
From April, the rate rises from 8.75 per cent to 10.75 per cent for basic rate taxpayers and from 33.75 per cent to 35.75 per cent for higher-rate earners. The surprise move came as Rachel Reeves confirmed a three-year stamp duty holiday on shares bought in stock market floats in London.
That tax is 0.5 per cent. But the dividend tax raid ‘flies in the face of the Government desire to encourage investors to hold UK equities’, said Sarah Coles, head of personal finance at Hargreaves Lansdown.
‘It risks persuading investors to take their money elsewhere, or putting them off investments entirely.’
The dividend tax attack, which will raise £1.2billion a year, will also hit millions of small business owners who typically pay themselves out of firms’ profits.
‘The last thing the UK really needs right now is more tax on investment and entrepreneurship,’ said Jason Hollands of wealth manager Evelyn Partners. ‘It will be felt by entrepreneurs as a kick in the teeth.’
City boost: Rachel Reeves confirmed a three-year stamp duty holiday on shares bought in stock market floats in London
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