The Government has announced that as part of a major social care overhaul the dividend tax will be increased by 1.25 percentage points from next April.

Currently dividends above the £2,000 threshold are taxed at 7.5% for basic-rate taxpayers, 32.5% for higher-rate taxpayers and 38.1% for additional-rate taxpayers.

From next April basic-rate taxpayers will pay 8.75%, higher-rate taxpayers 33.75%, and additional-rate taxpayers 39.35% on dividends above £2,000.