By now most of the contractors or individuals who receive dividend each year might have already received their new PAYE coding notices for 2016-2017. HMRC are trying to collect the tax due in advance by reducing the personal allowance used against paid salaries/wages. To reduce the tax code, they are using the figures of dividends paid in the year ending 5th April 2015.
As most of you are aware, from 6th April 2016, any dividend paid out in excess of £5000 will incur a tax at the rate of 7.5% (that is if an individual is a basic rate taxpayer).
For dividend paid in 2016-2017, the tax is not due until 31st Jan 2018. Therefore by adjusting the PAYE tax code, HMRC will be collecting the tax in advance.
Are the HMRC required to collect the dividend tax in advance?
The answer is NO. If you have already received PAYE code notice, you can request HMRC to amend your tax code and pay the tax when it’s due.
How do I amend my tax code?
You can do this by contacting the HMRC self assessment contact number on 0300 200 3310 or by filling out this form on the HMRC website.
If you require any assistance or further information relating to your PAYE code notice, please do get in touch on 0115 8240555 or email firstname.lastname@example.org.
We understand that there are a lot of changes happening from April 2016 and we will be more than happy to help if you have any queries relating to these changes.