The Association of Taxation Technicians (ATT) has claimed that the new dividend allowance is a tax rise “by the back door” after HMRC released a factsheet earlier this week confirming that the allowance will sit inside the normal tax bands for flexible workers and other taxpayers.

The ATT has claimed that the clarification on exactly how the £5,000 tax free allowance will be implemented will come as a huge surprise to millions of people across the country who have dividend income, as it was previously thought that the allowance would be more generous.

Chancellor George Osborne announced the new measure in the 2015 Finance Bill during this summer’s budget and industry experts believed that the new allowance would operate outside an individual’s tax rate band.

ATT now claims that the dividend allowance appears to be a tax-raising measure and expressed concern about the fact that it is intended to be passed into law from April next year, even though there has been no draft legislation published or any prior consultation.

ATT president Michael Steed said the factsheet published on GOV.UK had not accounted for the major impact the rules could have on company directors and other individuals, as the few examples given were of a simplistic nature.

He added: “We are seriously concerned that the practical implications of the proposals have not been thought through thoroughly enough. We think there is an urgent need for detailed consultation in advance of the drafting of the relevant legislation so that it can be drafted appropriately taking the feedback into account.”


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