At AB Accountancy we have contacted all of our clients operating through Limited Companies advising of the upcoming increase to Dividend Tax.
Efficient tax planning is essential to maximise your personal position and one size fits all approach is not applicable.
Here’s what is happening – a 2 percentage point increase from April 26
Basic Rate 8.75% to 10.75%
Higher Rate 33.75% to 35.75%
Additional Rate – no change remaining at 39.35%
The £500 Dividend allowance is also unchanged meaning he first £500 of Dividends is tax free.
So it is time to review your situation and look if you have any headroom to extract anymore profits this month, beating the 2% increase. Of course you need to consider if this might tip you into a higher bracket first.
You also then need to consider that Dividends paid pre April fall into the 25-26 tax year and those paid after 6th April the 26-27 tax year meaning a 12 month difference in when the tax payment falls due to HMRC
So as I say there isn’t a one size fits all approach, the only constant is that everyone should be reviewing their tax planning strategy right now
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