BUDGET 2025: What does it mean for investors?
There wasn’t much in yesterday’s speech that was directed at investors. If you rely on dividend income, however, there was one nasty surprise – tax rates on dividends are to be increased by 2% from April 2026.
It’s rising, the government says, to bring it more inline with the rate paid on income from other sources. The cost of owning income-producing shares will increase at the ordinary rate from 8.75% to 10.75%, while the upper rate will go from 33.75% to 35.75%.
Our view
The new tax on dividends flies in the face of the government’s goal to encourage more of the UK public to invest and boost share-ownership (and therefore, investment capital) in UK companies. However, this tax won’t apply to anyone investing via a Stocks and Shares ISA, so it’s still the most important rule – invest first using an ISA, and only once you’ve maxed out your annual £20,000 allowance, use a General Investment Account.
For our top tips on the Best Stocks and Shares ISAs currently available (for all levels of investor from beginner to pro) take a look at this page.
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