From an investment perspective, the most notable change in the post-election ‘Summer Budget’ was arguably the scrapping of the existing dividend tax credit regime. Under this system, dividends are paid with a notional 10% tax credit, meaning non- and basic-rate taxpayers have no further liability.
From April 2016, the tax credit will be replaced by a £5,000 tax-free dividend allowance for all taxpayers. Above that, investors will pay tax at 32.5% or 38.1%, depending on their marginal rate of tax. Chancellor of the Exchequer George Osborne said 85% of those who receive dividends will see no change or be better off. Still, the move could hurt those with large shareholdings held outside an ISA.
We often work alongside our clients’ accountants to ensure tax efficiency of profit extraction from business and to ensure our clients are taking advantage of the various tax allowances as part of our ongoing service, to find out more please contact Stephen Groves on 0113 436 0110 or email email@example.com