Ponty
pfm Member
The dividend tax, although raised in April from 7.5% to 8.75%, still represents a low tax compared to other forms of unearned income. Even CGT for lower rate taxpayers at the lowest is 10%, property 18%, savings interest (above £1000) is 20%. Okay, you can factor risk into these comparisons but tax, as far as I know, isn't correlated with risk. At the mo' BBs at 2.25% overall is at least as good as easy access ISAs and I've certainly noticed a hike in winnings over the past 2 months (though that might be just a lucky anomaly, of course).
Remember if you are taking dividends from your own business, you can only do so after paying 19% corporation tax on your profit (rising to 25% in April). Higher rate div tax is 33.75%. With a 1.25% increase that’s 35%. That will give an effective tax rate of 60%. Sod that.