British investors should cut dividends by 9% or they will pay twice as much income tax and capital gains tax on share options as their US counterparts, says BDO Stoy Hayward.
The firm called on the chancellor to reduce the tax rate on UK dividends by 9% - from 32.5% to 23.5%. This comes as US investors in listed companies are set to benefit from a tax liability of only 15% on the dividend return and capital gain.
This means that while an individual in the US investing 10,000 in a share paying a 5% dividend will now suffer a total tax liability of 1,875, an individual in the UK investing on the same terms will suffer a total tax liability of 4,025 - more than twice as much.
BDO tax partner Stephen Herring said: 'It is na've to think that the tax treatment of dividends and capital gains has no impact on investment decisions.'