The reduced dividend allowance already affected approximately 3,250,000 individuals in 2023. The number may increase to around 4,405,000 in 2024. Dividend income from assets held in ISAs will remain entirely tax-free. Many business owners are pulled into the tax brackets, who are now currently being allowed to disclose any unreported dividends or let HMRC know if they believe there are no dividends to declare.
If they do have dividend income to report, HMRC suggests using an online disclosure service. This service requires registration, and once done, a payment reference number (PRN) will be sent by post. Any interest and penalties are also paid on the same platform.
Any owed amounts, including penalties and interest, must be paid within 90 days of receiving the PRN. Those without any dividend income to declare have 30 days to inform HMRC via their email address or telephone number.
Penalties could match the tax owed if incorrect amounts are submitted, alongside daily interest charges for delayed payments. Aside from the 90-day deadline post PRN receipt, overall non-compliance may trigger a compliance check by HMRC, resulting in greater penalties for undisclosed dividend payments.
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HMRC prompts disclosure of dividend income. (5 February 2024). Retrieved from ICAEW:
HMRC letters to company directors on undeclared dividend income. (7 February 2024). Retrieved from Mercian Accountants:
One-to-many letters – inferred distributions. (7 February 2024). Retrieved from Claritax News: