The April dividend tax change, business entity choice & business financial protection considerations
Chancellor of the Exchequer George Osborne’s summer Budget was pitched as a Budget for working people. But does that mean all working people, or just employees in a certain wage bracket? The biggest shock came from changes to the dividend regime. From April, there will be no more grossing up of dividends and offsetting a notional credit; instead, taxpayers get the first £5,000 tax-free, then pay tax at increased rates on the balance. In practice, even after the £5,000 tax-free allowance, the loss of the tax credit means more tax will be paid overall with directors paying 7.5% more tax on any dividend payments. The Chancellor’s changes…
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