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Chancellor announced dividend tax hike from April 2016
Article Author: Sarah Collins Posted on: July 17, 2015 (Full Author Bio in the box on the right side)
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Most small Ltd Co owners with low salary high dividend income extraction will see a hefty personal tax hike.
Ignoring £5k tax free allowance, dividend tax rate will increase by 7.5% across all income levels.
MVL Online has outlined some of the proposed changes in the article below.
Proposed changes:
- Scrapping 10% notional tax credit
- Instead £5,000 dividends tax free, then
- Dividends taxed at 7.5% for basic rate taxpayers, 32.5% for higher rate and 38.1% for additional rate
How much has it changed:
- Basic rate has changed from 0% to 7.5%
- Higher rate has changed from 25% to 32.5%
- Additional rate has changed from 30.6% to 38.1%
There seems no easy way to avoid this for an ongoing business, other than simply taking less money out now or accepting the higher personal tax.
Alternatively, if you’ve got a company with lots of cash and you’re perhaps considering doing something else, it’s worth looking at the option of a solvent liquidation.
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