Dividend tax changes
Alongside the cuts to corporation tax rates the government is looking to reform and simplify the system of dividend taxation. This should not change the position for shares held in ISAs and pension schemes.
From April 2016 the deemed tax credit is being abolished. Instead there will be a new tax-free Dividend Allowance of £5,000 a year for all taxpayers. Inevitably the changes will result in losers as well as winners.
Currently an individual with his own company will typically take a salary up to his personal allowance and then a dividend of around £28,000 giving him around £38,000 totally tax free. Thereafter the next £51,000 of dividend (deemed gross c. £57,000) carries a tax charge of £12,750.
Under the new rules the liability will rise to £18,675.
Just to put this in context as a bonus the cost would be around £30,380 (tax and NIC).
Date: 8th July, 2015
Articles from this Author
1st November, 2018
Budget 2018 - Changes for businesses
22nd October, 2018
Making the most out of your home? Rent a room relief
3rd May, 2018
Tax changes for non-resident corporate landlords
4th April, 2018
EMI options - a current risk
Contact Business Service Partners
Choose from the drop down menu below to select a Partner to contact.
Sandy Bell, Partner in Rickmansworth considers the merits of Furnished Holiday Lettings in Optima magazine… twitter.com/i/web/status/1…
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole