Important Tax update - tax on Dividends coming in April
In last year’s second Budget the government announced it was changing the way dividends are taxed. So what will this mean for me the small business owner I hear you say? How will dividends be taxed from now on? How do these tax changes affect me?
In short, you might pay more tax. To start with the dividend tax credit will be abolished and dividends will be taxed at a series of rates between 0% and 38.1%. This means that if you have a dividend income of over £5,000 but within the basic rate tax band of 20%, you will find yourself with a bill to pay for the first time. So, it seems that you could potentially be worse off than before.
The first such tax will be payable by 31 January 2018 or people who have “PAYE” income (salary or pension) can opt to have the tax deducted from their salary or pension by adjustment of the PAYE code. By now you have noticed that like all taxes it’s complicated – but you’re not alone here.
It’s best you speak to an AIMS Accountant who will tell you exactly what these new changes will mean to you – and there is no cost to tell you. There is no one better to speak to as AIMS have been working with small businesses for over 23 years and know what’s right for your business and what you should know.