{"id":2536,"date":"2018-04-19T02:20:10","date_gmt":"2018-04-19T02:20:10","guid":{"rendered":"http:\/\/asadkarim.co.uk\/?p=2536"},"modified":"2018-04-10T07:22:29","modified_gmt":"2018-04-10T07:22:29","slug":"2000-tax-free-dividends-what-it-means","status":"publish","type":"post","link":"https:\/\/www.asadkarim.co.uk\/?p=2536","title":{"rendered":"\u00a32,000 Tax Free Dividends = What it means"},"content":{"rendered":"

The rules on dividends from HMRC are clear to UK tax payers.
\nYou are allowed “only” the first \u00a32,000<\/strong> of dividends to be tax free, and then anything above is taxed. Dividend income in excess of the allowance is taxable at the following rates: 7.5% within the basic rate band; 32.5% within the higher rate band; and 38.1% on dividend income taxable at the additional rate<\/p>\n

So what is \u00a32,000 tax free dividends<\/strong> worth if you held some high quality UK stocks.<\/p>\n

e.g the world’s leading Telecommunications corporation is BT plc. www.bt.com<\/a><\/p>\n

https:\/\/www.btplc.com\/Sharesandperformance\/Dividends\/Dividends.htm<\/a><\/p>\n

In the tax year 2017-18 BT paid 2 dividends:<\/p>\n

4.85p in 5th Feb 2018
\n10.55p in 4th Sept 2017<\/p>\n

4.85p + 10.55p = 15.4p<\/p>\n

So to have \u00a32,000 dividend income in 2017-18 from BT you would need: \u00a32,000 \/ \u00a30.154 = 12987.01298701299 Shares in BT plc.<\/p>\n

at today’s market price of \u00a32.35<\/p>\n

http:\/\/www.shareshop.hsbc.co.uk\/shareshop\/security.cgi?csi=10025&action=<\/a><\/p>\n

That would mean an investment of \u00a32.35 * 12987.01298701299 = \u00a330519.48051948052<\/p>\n

Thus \u00a330,519 buying BT shares<\/strong> today would give an approximate income of \u00a32,000<\/strong> if all things being equal (share price steady, dividend payment steady). BT Be There<\/strong>.<\/p>\n

If you wanted \u00a32,000 income in an oil company like Royal Dutch Shell plc, what would that be ?<\/p>\n

Shell pays out 4 dividends a year<\/p>\n

https:\/\/www.shell.com\/investors\/dividend-information\/historical-dividend-payments.html<\/a><\/p>\n

It is has remained steady at US$0.47 a share which is about 33p a share.<\/p>\n

Thus 4 dividends:-<\/p>\n

33p+33p+33p+33p = \u00a31.32<\/p>\n

So to have \u00a32,000 dividend income in 2017-18 from Royal Dutch Shell B shares you would need: \u00a32,000 \/ \u00a31.32 = 1515.151515151515 Shares in Royal Dutch Shell B plc.<\/p>\n

at today’s market price of \u00a323.71<\/p>\n

http:\/\/www.shareshop.hsbc.co.uk\/shareshop\/security.cgi?csi=133755<\/a><\/p>\n

That would mean an investment of \u00a323.71 * 1515.151515151515 = \u00a335924.24242424242<\/p>\n

Thus \u00a335,924 buying shares<\/strong> in Royal Dutch Shell B would give today would give an approximate income of \u00a32,000<\/strong> if all things being equal (share price steady, dividend payment steady)<\/p>\n","protected":false},"excerpt":{"rendered":"

The rules on dividends from HMRC are clear to UK tax payers. You are allowed “only” the first \u00a32,000 of dividends to be tax free, and then anything above is taxed. Dividend income in excess of the allowance is taxable at the following rates: 7.5% within the basic rate band; 32.5% within the higher rate […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2536","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/2536","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2536"}],"version-history":[{"count":1,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/2536\/revisions"}],"predecessor-version":[{"id":2537,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/2536\/revisions\/2537"}],"wp:attachment":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2536"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2536"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2536"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}