Can EIS relief be applied to the new dividend tax?

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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.

Replies (5)

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By Matrix
28th Mar 2017 20:15

So dividend tax is not income tax then?

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Replying to Matrix:
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By norbie
28th Mar 2017 20:41

That is what I am not sure of.

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By cjtrevor
28th Mar 2017 23:43

Yes, EIS relief will reduce or offset the Income Tax incurred on dividend income

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By Tim Vane
29th Mar 2017 00:03

There's a new dividend tax? Who knew? Didn't see that in the legislation.

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Replying to Tim Vane:
By johngroganjga
29th Mar 2017 07:49

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.

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