In April 2016, the complicated tax on dividend income was removed and replaced by a new £5,000 dividend allowance that will be free of tax for all.

The policy explanation given by gov.uk at the time was that the change will ‘help address the incentive for some people to set up a company and make payments as dividends rather than as wages simply to reduce their tax bill, enabling the government’s plan to reduce the rate of corporation tax to 18 percent by 2020.’