Substantial changes to the taxation of company dividends could increase the tax liability of directors and shareholders of limited companies from April. Doctors who pay themselves dividends from the profits of a company they own could be significantly affected.
From 2016 the Government will remove the current dividend tax credit and replace it with a new tax-free dividend allowance of £5,000 a year for all taxpayers. Individuals who receive more than £5,000 from company dividends held outside tax-efficient plans such as ISAs could pay more tax.
For dividend income above this allowance, higher-rate taxpayers will pay 32.5 per cent tax and those who pay the additional rate of 45 per cent will face 38.1 per cent tax – on top of the 20 per cent paid by their company.
Increasingly it is going to be important to ensure your assets are structured as tax-efficiently as possible. Are your adviser and accountant working together? For more information, call one of our advisers on 0207 636 7006.