Chancellor Jeremy Hunt has halved the tax-free allowance for dividends from £2,000 to £1,000 per year.

It will be reduced further to £500 from April 2024.

Keith Churchouse, founder at Chartered Financial Planner Chapters Financial, said the review of dividend allowances could lead Financial Planners to review their approach to General Investment Accounts.

He said: “The reductions to CGT limits and dividend allowances are likely to see a review of taxable General Investment Accounts and their overall tax efficiency.

“I am not surprised that this has been looked at as an opportunity to raise more tax and is an opportunity for planners to look again at what can be achieved. Perhaps the Investment Bond structure will become a more popular wrapper within which to invest.”

While eight in ten (81%) adults said they would back tax rises to shore up the nation’s finances, only 25% would back an increase in Dividend Tax, according to a survey by Opinium on behalf of AJ Bell.

The dividend allowance, which is on top of the income tax personal allowance, was reduced from £5,000 to £2,000 in 2017

Rob Morgan, chief investment analyst at Charles Stanley, said: “The dividend allowance was reduced from £5,000 to £2,000 in 2017. Lowering it further means more people end up paying tax on their dividends, notably those reliant on them for regular income and self-employed individuals paying themselves via their own company.”

Les Cameron, head of technical at M&G Wealth, said the changes to CGT and Dividend taxation could cause a long-term reduction in the total returns received by trustees and individual investors.

He said: “What many don't realise is if they purchased their portfolios within an investment bond wrapper their investments would be subject to the special life assurance corporation tax regime with much lower taxation rates - broadly, 20% for interest, other income and gains and 0% for dividends.

“The individual would then be within the insurance bond chargeable event regime where the basic rate tax credit they receive with onshore investments, savings allowances and top slicing relief all mean that many people pay little or no tax when they subsequently cash in their bond.

“The increase to Dividend taxation that was in the pipeline, additional rate cut, reduction in annual CGT allowance, halving of the dividend allowance and freezing of allowances is not good news for those looking to grow their wealth outside of a tax wrapper. When taken cumulatively over several years this could see quite a drag on overall return.

“ISAs and pensions are obviously a go-to place for investors to shelter their investment income from taxation. Many people will already be using these allowances and, for those who do, investment bond wrappers should become more popular. Investment bonds are subject to the special life assurance Corporation Tax regime which has much lower tax rates for many who would otherwise be holding the investments directly. For those with the risk appetite, venture capital schemes may prove popular to reduce the tax burden.”

Looking at other measures, Mr Churchouse added: “The Tesla adviser community might be wincing a little with the thought of car tax becoming applicable to electric vehicles in 2025.

“It was a skilful budget, although (as they say) the proof of the pudding will be in the eating.”