As of April
2016, notional 10% tax
credit on dividends will be abolished. Instead, a £5,000 tax-free dividend
allowance will be brought in. Dividends above this level will be taxed at 7.5% on the basic
rate, 32.5% on the higher rate
and 38.1% on the additional
rate.
The changes,
announced in the Chancellor’s summer budget, have been met by much furore
amongst the small business community, and a campaign has been launched with the
aim of attracting the support of 100,000 business leaders via signatures on a
petition. Once that figure is reached, the campaign will be considered for
debate in Parliament.
70,000 Signatures Still Needed
Launched on
September 10 by small business owner Serena Humphrey of financial Nottingham
based training company The F Word, the petition has so far been signed by
almost 30,000 people.
Serena said,
“There is
massive interest in scrapping the tax on dividends and helping small and
medium-sized enterprises have a better chance of surviving. We’re asking the Government
to reconsider the tax.”
Serena points out that pension
auto-enrolment, the increase in the Minimum Wage and insurance premium tax and
the new Living Wage for the over 25s will make it even more of a challenge for
smaller companies to survive. “This dividend tax is an attack too far on small
businesses,” she says, continuing: “Those profits have already been taxed at 20
per cent, so this 7.5 per cent tax means we’re paying 27.5 per cent tax, well
above the basic rate.”
Where to Find the Petition
If you agree with Serena and would like
to sign the petition you can do so by following this link: http://petition.parliament.uk/petitions/106525. The deadline is 24
February 2016. The Government’s response to the campaign can also be read by
following the same link.
If you are concerned as to how the new
dividend taxation system will affect your business finances, don’t hesitate to
discuss the matter with your bookkeepers who will be able to explain the
potential effects in your particular situation.
