Dividend

posted on April 8, 2016in the Tech Category

Dividend

The Chancellor has now imposed additional tax charges for extraction of income from Companies by way of dividends paid from 6th April 2016 onwards. Prior to 5th April 2016 dividends within the basic rate band were tax free.  Dividends in the higher rate band were taxed at 25% of the net dividend and dividends in the additional rate band were taxed at 30.6% of the net dividend. From 6th April the first £5000 of dividend is tax free, dividends in the basic rate band are taxed at 7.5%, dividends in the higher rate band are taxed at 32.5% and in the additional rate band dividends are to be taxed at 38.1%. At MBL we have been pro-active with our clients and assisted them to vote c. £1.5m of dividends in Feb/March 2016 thus producing tax savings on those dividends of c. £110,000 compared to dividends paid post 6th April. Whilst dividend tax rates will be increased from 6th April it will still remain beneficial to extract income from Companies by way of dividend rather than through PAYE but, you do need to consult on of our tax advisers to develop a strategy for your business. Tony Collier, Managing Director

Written By: MBL

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