Make sure you are prepared for the tax changes…
Many of you will have returned from the Christmas and New Year break with a fresh set of plans for how to grow the business in the year ahead. One significant consideration to throw into the pot is the forthcoming change to dividends and the introduction of annual allowances and taxation on UK dividends.
Dividends have long been a tax efficient means of profit extraction under UK tax law, but as announced in his 2015 Budget, Mr Osborne has decided to turn the spotlight on SME’s and use dividends as a means of raising tax revenues.
Whilst we may debate his reasons for doing so, the fact is that from April adjustments may be required to ensure you are continuing to extract money from your business in the most tax efficient manner. We strongly recommend that you book time to see a member of our team sooner than later and discuss your personal circumstances, as dividends declared before 31st March will not be subject to the new annual allowance, providing an opportunity for you to ‘make up ground’ before the changes coming into force.
Furthermore, this is not simply about planning for 2016 but also looking ahead, as we can be sure the allowance is here to stay and is likely to be the thin end of the wedge – with future budgets and autumn statements likely to tinker with the banding, allowance and even tax rates.