It’s somewhat surprising that the changes to the taxation of dividends proposed in the summer budget have not received more attention in the general press.

This is especially so since the Chancellor made clear that, as a result, the Exchequer hopes to be £500m a year better off from 2019/20 - so not an insignificant tax generator.

The apparent motive behind the proposals is to reduce the cost of ‘future tax motivated incorporations’.

However, the effect will see nearly all taxpayers paying more tax on their dividend income, irrespective of whether they are business owners or pensioners. Dividend income within the wrapper of an ISA or pension will remain non-taxable.

No tax will be deducted at source; taxpayers will have to file self-assessments to pay any tax due.

The new rules are due to come into effect from April 6, 2016, but business owners would be wise to look at restructuring perhaps, before the rules come into effect or begin thinking about possibly withdrawing dividends before the changes.

Broadly we understand they will work as follows:

• basic rate taxpayers will pay tax at 7.5 per cent on their dividends over £5,000, compared to nothing at present;

• higher rate taxpayers will pay tax at 32.5 per cent on dividend income in excess of £5,000, at present their effective rate on cash dividends is 25 per cent; and

• additional rate taxpayers will pay tax at 38.1 per cent on dividend income above £5,000, this compares to a present rate of 30.56 per cent on their dividend receipts.

If you ignore the initial £5,000 exemption, everybody’s dividend tax rate has increased by 7.5 per cent.

As a result, nearly everybody will be a tax loser, including the basic rate pensioner living off a share portfolio with dividend income over £5,000.

For business owners who have structured their affairs so that, for tax purposes, they and their spouse earn just up to the basic rate band and so take roughly £80,000 cash out of their company, the charges will leave them approximately £3,500 worse off as a result.

Amongst the few categories of people better off will be higher rate earners with dividend income of up to £21,500, because of the effect of the £5,000 dividend exemption, and those with income over £150,000 with dividend income below roughly £25,000.

Many taxpayers have asked whether it makes sense to accelerate dividend income into this tax year and avoid the additional charges; however, the right answer will inevitably depend on their particular circumstances. There are clearly lots of possible permutations to consider but essentially each taxpayer will need to look at his/her own specific facts to achieve the best tax position.