Brokers and investment platforms plummet on dividend tax hike

Shares in investment platforms and brokers plummeted today after prime minister Boris Johnson announced a hike to dividend taxes.

Broker, TP Icap, had 9.14 per cent shaved off its share price, plummeting to 179.04p from a day high of 196.60p.

Investment platforms AJ Bell and Hargreaves Lansdown both suffered heavy losses, down 2.07 per cent and 1.05 per cent respectively.

The government today announced an unexpected hike to dividend taxes as part of a regime  designed to pay for clearing the backlog of NHS work and fixing the UK’s ailing social care system.

Prime minister Boris Johnson told the House of Commons the rate of dividend tax will rise 1.25 percentage points.

Robert Colvile, director of the Centre for Policy Studies, said: “The dividend tax hike, coming on top of a huge planned increase in corporation tax, will be a blow to business, the self-employed, and Britain’s tax competitiveness.”

The increase in dividend taxes will make it more costly for investors to hold their wealth in financial assets and draw income from dividends, reducing demand for investment platforms and brokers’ services.

However, retail investors can still protect their dividend income by holding shares in an ISA. These investment vehicles are a tax efficient wrapper.