Investors are essential to Chancellor Kwasi Kwarteng’s mission to grow the economy.

As a result, there were a number of announcements in his mini-Budget on Friday that will affect pensions, savings and investment portfolios.

Dividend duty drop helps entrepreneurs

Investors who receive a high level of income from investments will receive a tax cut from April next year, the Chancellor said.

The tax rate on dividend payments for basic rate taxpayers will fall from 8.75 per cent to 7.5 per cent and for higher-rate taxpayers from 33.75 per cent to 32.5 per cent. Additional rate taxpayers will have their current rate of 39.35 per cent abolished altogether.

In reality, only investors with big portfolios pay tax on dividends as investments sheltered in pensions and Individual Savings Accounts (Isas) do not attract it. And everyone has an annual £2,000 tax-free dividend allowance.

Laura Suter, head of personal finance at investing platform AJ Bell, calculates that an investor would need to have a portfolio of more than £50,000 yielding 4 per cent to benefit. However, she points out that company directors who pay themselves in dividends are likely to make huge savings.

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