Fight back! Act now to save 7.5% Dividend tax!

  • by Carole Jordan
  • 18 Mar, 2016
Small business owners fighting back at the dividend tax increases

Small business owners in Limited Companies may face a 7.5% increase in their dividend tax from 6.4.16 where dividends exceed a tax free allowance of £5,000.

How can you save 7.5% Dividend tax?

Check your accumulated profits figure to see if there is sufficient profit to declare an additional dividend before 6.4.16.  

If so, you may wish to declare dividends this year rather than wait until next year when taxes are higher.  

This will be true where the extra dividends this year fall into the same or lower tax bracket than they would next year.

No cash to pay Dividends?

This doesn’t matter. Provided the paperwork is done for final dividends the amount can be left as a loan in the company and paid to the shareholders when the funds are available.

Is there a downside?

If your total income remains below £42,385 then additional dividends will not incur any additional tax. 

BUT, if your income goes above this figure in this tax year you will pay 25% on the net dividend in excess of this amount which will be due in January 2017 rather than 32.5% for the following year which will not be due for payment until 2018. 

And, if you don’t already do a tax return, you will need to do one and pay this tax in January 2017. 

So, don’t miss out and end up paying more tax next year than you need to. Take a little time now to think about your situation and decide if this would be good for you. 

If you need advice, contact Carole Jordan now as there are only 10 days left to the end of the tax year! You can call on 01273 882200, or you can email us at: info@businessheads.co.uk.

Carole Jordan FCCA is a tax and business strategist and MD of Businessheads Consultants and Accountants.

All details above were correct at the time of publishing - for more up to date information please get in touch .

You might also be interested in...

If you enjoyed the blog, why not leave us a comment, or share it with a friend...

Free advice delivered to your inbox

Browse our other blog posts...

Our latest blog

by Carole Jordan 19 Jan, 2018

It’s always nice to reward your employees, especially those who may have worked for your business for a long time. Find out how you can do this and still reap the tax benefits.

by Carole Jordan 12 Jan, 2018
Now, more than ever, exporting across the world offers an opportunity not seen for many decades. 

If you want to grow your exports then the government want to help you on your way with Finance, Insurance and opportunities to meet potential customers. Yippee!

by Carole Jordan 08 Jan, 2018

There’s a hidden gap in skills and knowledge between those of us who are qualified Accountants, and those who refer to themselves as Accountants.  Every day we make an investment in your business to ensure you receive the quality of advice you need to protect your business.

by Carole Jordan 03 Jan, 2018

It’s January and its ‘National Pay Your Self-Assessment Tax Month’!
Your tax return should be safely in the HMRC net now but if you didn’t file before 12th December you will not receive a statement and payslip in the post. In any case, it’s best to brace yourself for making the payment as the statements are drip feeding very slowly through the postal system as I write.

by Carole Jordan 15 Dec, 2017
An easier way to pay your impending tax bill could be through your PAYE tax code. Find out if you qualify and how you can go about setting this up.
More posts
Share by: