Summer Budget 2015 announced a fundamental change to how dividends are taxed.
The media has focused much more on national minimum/living wage and benefit changes, however we believe this rule change needs some real attention by owner managed businesses.
Basically the existing regime has been scrapped and replaced with new rates.
From April 2016, there will be no 10% tax credit and instead a new £5,000 tax free allowance will replace it. The table below compares the old and new:
We are still waiting for HMRC to publish its full detail on these provisions and when they do we will be contacting clients individually to discuss dividend plans. Accelerating dividends in advance of April 16 where reserves and tax thresholds permit could be the best response for most.
If you have any questions please do not hesitate to contact Lesley Sutton on 01484 550 037 or email firstname.lastname@example.org