Tax on dividends and shareholder loans


From 6 April 2016 the rates of tax on dividend income have increased by 7.5% (to 7.5% for basic rate tax payers, 32.5% for the higher rate band and 38.1% for additional rate payers) with a 0% rate band introduced for the first £5,000 of dividends received. 

In line with this, the tax charge on overdrawn close company shareholder loan accounts has also been increased by 7.5% to 32.5%. This charge remains refundable once the loan has been cleared, but with the repayment not due until 9 months and a day after the end of the accounting period in which the loan is repaid, the cash flow implications need to be taken into account.   

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