Any delay might be understandable, given the complexity that seems to be generated whenever the Inland Revenue meets the stock exchange. Maurice Parry-Wingfield, of accountants Deloitte & Touche, says new dividend tax rates and other changes introduced by Labour mean that personal taxpayers will be facing at least 10 separate rates of tax by 1999.
Currently, the receipt of dividends from shares need not complicate matters unless it pushes you into the 40 per cent tax band or you already pay no tax. The principle is that dividends are received with basic-rate tax already paid. The "tax voucher" sent with your dividend cheque or payment receipt always shows this "tax credit" and the net dividend you are left with after it has been deducted.
The tax credit relieves you of paying any further tax if you fall within the 20 or 23 per cent tax bands. Higher-rate taxpayers have another 20 per cent to pay on the gross sum - that is, the tax credit plus the net dividend - while non-taxpayers and personal equity plan (PEP) investors can reclaim the tax credit. (The only wrinkle to this is if the company pays a so-called foreign income dividend, in which case the tax already paid is not recoverable by anyone.)
Relatively straightforward thus far, but the picture will become about as clear as mud once Labour's changes to the rules take effect in April 1999. First off, the tax credit will be cut from 20 to 10 per cent, although, somewhat confusingly, it will become irrecoverable for those who do not pay tax: bad news for non-taxpayers and others whose tax allowances are not absorbed by other income. If you are one of these, you will in effect be paying tax where you did not before, unless you keep your shares in one of the Individual Savings Accounts (ISAs) coming in from April 1999.
If you are a basic or lower-rate taxpayer you will continue to have nothing further to pay, leaving your after-tax income exactly where it was before.
The effect on higher-rate tax payers is also neutral, even if a new layer of confusion is added by the introduction of a 32 per cent rate band. This is the rate to be applied to the grossed up value of dividends (that is, the net payment plus the new 10 per cent tax credit) to ensure that higher-rate payers meet their bigger tax commitments.
But prepare to reach for the ice pack when you try to unravel the mysteries of Capital Gains Tax (CGT). The principle is simple: you are taxed on crystallised profits in excess of (currently) pounds 6,500 a year. Losses can be set off against capital gains made elsewhere. Incidental costs such as brokers' fees can be charged and the effects of inflation can also be factored in to reduce the taxable gain. But the fun really begins if you sell only part of a holding of shares.Either get the Inland Revenue to work out the sums or, better still, seek professional advice.
At present, only around 100,000 people a year are fortunate enough to make sufficient gains to become liable for capital gains tax. And that already small number could fall further as a result of the review of CGT, apparently with the aim of encouraging more long-term investment. The latest rumour is that any changes to be announced in the spring Budget are likely to be minimal.
But, most importantly, investors should remember two golden rules about tax. Firstly, do not let tax considerations rule investment decisions: tax savings will rarely make up for a bad investment. Secondly, do keep good records. Even an old manila envelope to keep your dividend counterfoils together and a file for contract notes and other vital correspondence will save countless hours of frustration when the dreaded tax return arrives - in April.