Budget 2017: 'Unwelcome surprise' as govt slashes tax-free dividend allowance

Chancellor Philip Hammond has announced a significant cut in the tax-free dividend allowance from £5,000 to £2,000 from April 2018 in his first and last Spring Budget.

The cut will come into effect from April 2018 and will mean company directors and shareholders will see a dramatic fall in the amount of dividends they receive. Labelling the system as unfair, Hammond said the dividend allowance which is "extremely generous tax break for investors with substantial share portfolios" must be addressed. He said: "The dividend allowance has increased the tax advantage of incorporation. It allows each director or shareholder to take £5,000 of dividends out of their company tax free, over and above the personal allowance.  "I have decided, therefore, to ...