• Skip to main content
  • Skip to footer
SBCA Chartered Accountants

SBCA Chartered Accountants

Chartered Accountants in Preston

Call Us Now 01772 204102

  • Facebook
  • LinkedIn
  • Twitter
  • Accountancy & Tax
  • Business Growth
  • Private Wealth
  • Who We Help
  • About
  • Our Team
  • Client Testimonials
  • Contact
  • Client Login

The Summer Budget – Director shareholders hit hard!

9th July 2015 by Chris Bond

DIVIDEND TAX

For many years dividends have come with a 10% tax credit which means that there’s no additional personal tax to pay on dividends received by basic rate taxpayers – the basic rate of tax on dividends is currently 10%.  However, the Summer Budget has announced that, from 6 April 2016, this tax credit will disappear and be replaced with a tax-free dividend income allowance of £5,000.  Any dividends received above this will be taxed at 7.5% (up from the current effective rate of 0%) for basic rate taxpayers, 32.5% (up from the current effective rate of 25%) for higher rate taxpayers and 38.1% (up from the current effective rate of 30.1%) for higher rate taxpayers.

Example:

You have annual profits after corporation tax of £30,000. Your advice for 2015/16 was for them to take an annual salary of £10,600 to cover their personal allowance with the remaining £19,400 as dividends.  Under the current rules you have no personal tax to pay.  Under the new rules, from April 2016, you will suddenly have a personal tax bill to pay of £1,080 ((£19,400 – £5,000) x 7.5%) – quite a shock for many clients!

Advice:

Remuneration planning has become a lot more complex, especially with the withdrawal of the employment allowance for some, and the restriction on buy to let mortgage interest relief.  Take advice before these new changes come into effect as it may be better to accelerate dividend payments.

 

Category iconBusiness Tax,  Personal Tax,  Self Assessment

Xero Gold Partners
ICAEW Chartered Accountants
Clear transparent pricing champions

Footer

Get Your Free Copy of Chris’s Book

Reflect Dream Do

Quick Links

  • Get in touch
  • Book Your Discovery Call
  • Client Testimonials
  • Blog
  • Meet Our Amazing Team
  • Work for us
  • Time. Money. Headspace.

Get Your Free Tax Planning Checklist

Business Tax Planning Checklist

Join The Preston Business Community

Preston Business Community

The Latest From Our Blog

Tax Time

Tax Time – Dates for May 2022

21st April 2022 By Chris Bond

THE UPS AND DOWNS OF SPRING STATEMENT 2022

The ups and downs of spring statement 2022

24th March 2022 By Chris Bond

Tax Time

Tax Time – Dates for April 2022

21st March 2022 By Chris Bond

Read more from the blog

We use telephone tracking numbers to link a user’s call to the marketing channel that they originated from. This is done using cookies, you can choose to decline cookies using your browser settings if you would prefer not to be tracked. We may record calls for training or monitoring purposes.

This firm is not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services to clients because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide.

Copyright © 2022 SBCA Chartered Accountants · Privacy Policy · Terms & Conditions · Site Design by Simply Smarter Marketing