Tax changes

Discussion in 'SA6' started by Cobus, Mar 30, 2007.

  1. Cobus

    Cobus Member

    Colin, when the UK corporate tax was reduced to 28% and the basic rate to 20%, where there any changes to the dividend tax for higher rate payers (the addidtional 22,5%)? Also, does this mean that basic rate payers now pay 20% on all income (salary, rental and other savings income)? Were there any changes for life insurers (w.r.t the 22% and 20%).
    Thanks
     
    Cobus, Mar 30, 2007
    #1
  2. Colin McKee

    Colin McKee ActEd Tutor Staff Member

    tax changes and SA6

    Hi

    The tax change wouldnt have materially affected the dividend situation, only the tax on earned income from salaries or property income held by individuals. Basic tax payers will pay 0%, then 20%, on earned income. Higher rate will pay 40% above the threshhold. Dividend income for basic rate payers will result in no additional tax to be paid. Some would say this can be described as 10% (rather than the 20% in your email) because the tax credit is 10%. Higher rate payers will pay an additional 25% of the net dividend, or 22.5% of the grossed up dividend (including the tax credit).
    Unfranked income will be taxed at 0%, 20% (the 10% has gone here) and 40% which isnt much different from th previous arrangement.
    Life insurance I am not sure - I will consult an expert and update the thread. Its probably a bit too current to be eaminable, and wont change until 2008/09, but interesting nevertheless.:D

    Confirmed that nothing else material in life insurance (from an asset side)
     
    Last edited: Apr 11, 2007
    Colin McKee, Mar 30, 2007
    #2

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