New Dividend Rules – Double Taxation is Back Again
The government’s move to hit shareholders with an increase in dividend taxes of around 7.5% has not been a popular one, especially with large investors.
While the Chancellor has said it was because the old system was far too complicated, it is becoming clear that this new version of dividend tax is just a new riff on double taxation.
The additional 7.5% tax is set to earn the treasury an extra £2bn, taxing the same money twice just like the Dividend Tax Free Allowance was meant to excuse wealth creating entrepreneurs and business people from having to do.
In the good old days, pension funds and charities were able to use the tax credit on dividend payments to get back the tax paid by companies.
Gordon Brown took away this privilege, leaving Britain’s pension funds in a sorry state, with companies having to take money from their current revenues to put their pension fund right.
Shares in British companies now form a substantially lower percentage of pension funds’ and charities’ portfolios than 20 years ago.
This not only reduces the long-term returns that might be achieved for pensioners but reduces the flow of investment into British industry.
It seems like George Osborne is carrying on where Gordon Brown left off, which is not good news for those who create opportunity and wealth for UK PLC.