Stocks to watch as tax-free allowance for dividends falls

By - Rishika Raina

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Highlights

  • Chancellor Jeremy Hunt announced a reduction in the tax-free allowance for dividends.
  • In addition, Chancellor Jeremy Hunt has declared that the yearly exempted sum of money in capital gains tax would also be slashed from £12,300 to £6,000 from 2023.
  • The Autumn Statement has negatively hit the sentiment of contractors.

In his Autumn Statement on 17 November, Chancellor Jeremy Hunt announced a reduction in the tax-free allowance for dividends. Next year onwards, the dividend allowance would be slashed from £2,000 to £1,000. A year post that, the allowance would be further lowered to £500, as per the latest announcement.

According to Andrew Tully, Canada Life's technical director, the reduction in dividend allowance is not good news for normal investors who have their money held in undid portfolios beyond Pensions and ISAs.

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In addition, Chancellor Jeremy Hunt has declared that the yearly exempted sum of money in capital gains tax would also be slashed from £12,300 to £6,000 from 2023 and then further reduced to £3,000 from April in the following year.

The Autumn Statement has negatively hit the sentiment of contractors. According to a recent statement given by Genie Accountancy's COO to ContractorUK, contractors are dealing with distress yet again following the pandemic-related disruptions and lack of government support during the phase.

The take home-pay of contractors will be negatively impacted due to these cuts amid the government's attempt to persuade industries to expand and thrive in the UK. While the tax-free dividend allowance and the yearly exempted sum of money in capital gains tax fall, UK investors can explore the following LSE-listed dividend-paying stocks.

Diversified Energy Company plc (LON: DEC)

The dividend yield of the FTSE250-listed gas and oil producer business, Diversified Energy Company plc, on yearly basis stood at 11.3% as of 18 November. At around 12:50 PM (GMT), DEC shares saw a hike of 0.30 points, or 0.24%, and were trading at GBX 126.10. Offering returns of 16.78% and 20.80% on a one-year and YTD basis, the company's EPS at the time of writing stood in the negative territory at -0.41. Meanwhile, the business had a turnover of £63,398.17.

Rio Tinto plc (LON: RIO)

The dividend yield of the FTSE100-listed mining business, Rio Tinto plc, on yearly basis stood at 10.8% as of 18 November. At around 12:50 PM (GMT), RIO shares saw a hike of 40.00 points, or 0.75%, and were trading at GBX 5,407.00. Offering returns of 21.45% and 10.55% on a one-year and YTD (year to date) basis, the company's EPS (earning per share) at the time of writing stood at a whopping 13.03. Meanwhile, the business had a turnover of £28,558,563.58.

ContourGlobal plc (LON: GLO)

The dividend yield of the FTSE250-listed electrical services provider, ContourGlobal plc, yearly stood at 8.2% as of 18 November. At around 12:50 PM (GMT) on the day, GLO shares saw a fall of 0.50 points, or 0.20%, and were trading at GBX 250.00. Offering returns of 29.00% and 30.62% on a one-year and YTD basis, respectively, the company's EPS at the time of writing stood at 0.12. Meanwhile, the business had a turnover of £839.16.