A raid on share dividends will cost investors more than £3billion over the next five years.
The 1.25 per cent increase in dividend tax will hit around 2.5million savers by an average of £355 a year, Budget papers revealed.
Savers who receive dividend payments from their stock market investments are taxed on income of more than £2,000.
Nearly two-thirds of five investors will be affected by the increase if their dividend payments are not sheltered against the tax in an ISA, or in a retirement plan.
The 1.25 per cent increase in dividend tax will hit around 2.5million savers by an average of £355 a year, Budget papers revealed (stock image)
The rise, which comes into force from April, will see basic rate taxpayers pay dividend tax at 8.75 per cent and higher rate taxpayers at 33.75 per cent on dividend income of more than £2,000.
Those earning more than £150,000, known as additional rate income taxpayers, will now pay 39.35 per cent on dividends, up from 38.1 per cent.
An entrepreneur taking £45,000 per year in dividends is likely to see their tax bill increase by £378, while a small business owner receiving £75,000 in dividends could pay an extra £753.
The rise, which comes into force from April, will see basic rate taxpayers pay dividend tax at 8.75 per cent and higher rate taxpayers at 33.75 per cent on dividend income of more than £2,000 (stock image)
The Government stated that the increase would mainly affect men and that only 16 per cent will be over the state pension age. Directors of companies that receive dividends could be affected by the move.
The tax hike was first revealed in September. At the time Mike Cherry, chairman of the Federation of Small Businesses, said: ‘Business owners… are being punished with a fresh assault on dividend revenue.’
The new tax regime will cost HM Revenue & Customs around £530,000 to upgrade its IT systems.