At this moment in time, dividends paid to basic-rate taxpayers are regarded as taxed already within the corporate tax system, so there for there is no further tax to pay.

Under the new rules, only the first £5,000 a year of dividend income will remain exempt.

For dividend income above the allowance, basic-rate taxpayers will pay 7.5%, where as higher-rate taxpayers will pay 32.5% tax. Those who pay the additional rate of 45% will pay 38.1% tax.