Investment Income: Income Tax

(asked on 8th November 2021) - View Source

Question to the HM Treasury:

To ask Her Majesty's Government what additional revenues could be raised by aligning Dividend Tax rates with Income Tax rates applied to earned income.


Answered by
 Portrait
Lord Agnew of Oulton
This question was answered on 18th November 2021

Increasing the current rates of dividend tax to the current headline rates of income tax could theoretically raise around £8 billion a year, based on the 2021-22 tax rates. In practice, significantly less would be raised due to behavioural responses to any increases.

The Government has committed to increase rates of dividend tax by 1.25 percentage points, which is expected to raise £900 million a year by the end of the scorecard, accounting for behavioural responses. The higher rates of dividend tax from 2022-23 would therefore reduce the additional revenue that would be raised from increasing dividend rates to the rates of income tax.

The Government will continue to keep the tax system under constant review to ensure it is simple and efficient.

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