New tax on dividends

How will the new rules affect you if you own your own business?

6 April 2016 saw major reforms to the taxation of dividends. When announcing the changes George Osbourne said the reason for the change was because many people were taking advantage of the lower rates of tax due on dividends and “these lower rates are creating rapidly growing opportunities for tax planning”.

This criticism was probably aimed at small companies who pay a director a low salary followed up with a substantial dividend payment and in doing so save the company employers National Insurance Contributions.

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