From 6 April 2016 Dividends just got a whole lot more complicated…
Historically dividends have been paid out with a tax credit attached, which meant, as long as you stayed within the basic rate of tax you had no further personal tax bills, well I guess this current government thought the family run business owners out there have been getting away with something, so we now have the dividend tax, essentially a tax rise, well someone has to pay tax, and I guess if they can’t get the multi-nationals to do it then the family run business is an easier target, so, how will this tax rise work?
The first £5,000 of dividends will be tax free, all subsequent dividends will attract the following tax rates:
- Basic rate – 7.5% (previously tax free)
- Higher rate – 32.5% (previously 25%)
- Additional rate – 38.1% (previously 30.6%)
It is worth pointing out, you may want to consider the impact of taking a large dividend before 5 April 2016, it just may save you a lot of money in the long run!
As always, our T&C’s apply to this blog, and the above is not advice, as you should always seek professional advise before acting.
