Jeremy Hunt plans to half the dividend tax allowance from £2000 to £1000 the next year and then £500 the next year. I have a good chunk of high-dividend shares in UK companies (Shell, BP, National Grid, SSE and some insurance companies) that I bought during the pandemic. I earn over £1000 of dividends a year in my general investment account here on Freetrade. Now I’m thinking of moving it all to an ISA. What does everyone here plan to do?
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Not earning as much as you, but doing the same, everything will end up in my ISA. I pay enough tax on my earnings, so why should I keep paying for inept governance, be it Conservative or Labour? The UK must be the only country where you are taxed on earnings, then if you spend whats left you pay sales tax, if you save it, you pay income tax on your savings, if you invest it, you pay tax, then when you die, your family pays tax on your estate. You’re taxed 3 times on the same wage packet!!
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Same as above I will move everything in my gia in to my isa as I think market conditions are right to sell and rebuy.
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I agree that ISA is the way to go. Luckily I had already anticipated eventually earning more than £2,000 (I’ll probably be over £1,000 this year) so I started it off in an ISA. I also knew that Dividend allowance only ever goes in one direction and that’s not up! It was £5,000 several years ago.
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Personally i think the dividend allowance should at least be the same as savers £1000 a year.
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No you’re not - in the case of reduced dividend allowance, you’re only being potentially taxed on any additional earnings from dividends (not on the money you put in to buy the share).
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The point I was making was, any of your money that has had income tax levelled on it, should not be taxed again whatever you do with it. I understand what you’re saying, but having paid income tax, you then invest some of your net income and if successful and get and income from it, you pay tax on your intelligent purchase and taking the risk, how is this fair?
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Because you’re only being taxed on new income ie the dividends or capital gains (and you acknowledge that being taxed on income is fair).
You’re not being double taxed on the original income.
For example, you get paid £1000 and pay income tax (say at 20% for simplicity) so you take home £800.
You then invest £100 in a dividend paying stock and make £10 in a year from dividends. The only tax you would pay on those dividends would be 20% of the dividend ie the income (just the same as when you got the original income but importantly you’re not being taxed on any of the £100 you used to buy the stocks).
Now all that assumes you dont use or have maxed your ISA and that you’re actual income and dividends are much higher.
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Capital gains allowance also reducing, and pension LTA also frozen.
If you haven’t already done so it is time to plan ahead.
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So what’s the best way of moving this into an ISA? Does Freetrade offer Bed & ISA?
I want to move around 10k of UK shares. I’ll have to pay the stamp duty again which will cost around £50. How about the timing of the dividends?
As in previous years, I will max out my ISA allowance but I do need to rethink my holdings outside of that. The new reduced allowance will surely put me into a tax paying situation
We pulled together some charts on this topic which you might find interesting.
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An ISA is a no brainer everyone should be using this in the first instance for long term investing.
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I’ve maxed out my ISA allowance & hold GIA’s … Not overly bothered about the capital gains… I’d simply hold… But the dividend changes are a concern. I’ve recently invested into a dividend ETF portfolio 
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That’s the downside of where do you put your money after maxing out an ISA. For me, I overpay the mortgage.
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Hopefully one day, but currently I don’t have that problem. Unfortunately as cost of living go up, I suspect more and more people will find that.
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Can someone please confirm for me. That for 2023/2024 based on current plans. I can earn 1k dividends tax free and 1k tax free interest on savings on basic rate tax? Just trying to plan ahead.
Will then be taking the ISA plunge I imagine for the future…
I would say yes Jake. my only question back is does the dividends become part of your “earned” income pot so if your wages are just below the 40% tax bracket and the dividends take you over, would you be liable for the extra tax?
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Oooo I hadn’t actually thought about that and whether the dividends/saving interest would be seen as income.
a very quick google search shows me …
Please note that income that is within your dividend allowance is counted as taxable income (albeit taxable at 0%) and so counts towards your basic or higher rate limits and may therefore affect the amount of PSA that you are entitled to and the rate of tax you pay on dividend income that exceeds your allowance
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