Hello
I am wondering if EIS relief can be applied to a tax liability from the new 7.5% dividend tax, or if it can only be applied to income tax earnt via PAYE?
For example, if a director of a LTD company earns £11,000 via PAYE in year 16/17 and receives a dividend of £15,000 he will have paid no income tax, but will have to pay 7.5% tax on £10,000 worth of dividend (the amount above the £5,000 tax free allowance) when filing his SA tax return.
If the director has invested £1,000 in an EIS eligible scheme during the year he has £300 worth of EIS relief that could be used.
Can EIS relief be applied to this tax bill?
Many thanks in advance.
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It has continually annoyed me that the phrase "new dividend tax" has been used extensively (on AWeb and elsewhere) since the rates of tax on dividends changed. I did begin by correcting people - it's not dividend tax it's income tax on dividends, and it's not new it's just that the rates have changed - but I eventually gave up.