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Slash Your Tax for Small Businesses - 4. How business profits are taxed - 4.9. How an individual is taxed - 4.9.13. What’s the relevant dividend rate? - 2016/17 onwards
2016/17 onwardsThe taxation of dividends was overhauled with effect from 6 April 2016. Dividends paid after that date are not grossed up, and there is no notional 10% tax credit. The first £2,000 of dividends do not suffer any tax charge, as they are covered by the “dividend allowance” - which is really a 0% starting rate (it was £5,000 for 2016/17 and 2017/18). Dividends still form the top slice of income in the tax calculation, so any dividends falling within this allowance use up part of whichever...Click here -
Tax Breaks for Directors - Part 2 Director shareholders - 13. Dividends - 13.2. The tax break dividend
13.2. The tax break dividendTax breakWhere your net taxable income, i.e. income after deducting reliefs and allowances, does not exceed the basic rate band, you’ll pay no income tax on the first £2,000 of dividend income and just 7.5% on the balance. The basic rate tax band for 2020/21 is £37,500.2020/21£Personal allowance£12,500Add: basic rate band£37,500Total£50,000The first £2,000 of dividends is taxed at 0%. Whatever amount of the 0% band you use will reduce the amount of basic or higher rate band...Click here -
Slash Your Tax for Small Businesses - 5. Taking the profits out of the company tax efficiently - 5.5. Dividends - 5.5.1. Should I pay myself dividends?
5.5.1. Should I pay myself dividends?Yes. Dividends are an effective way to withdraw profits from your company, even following the increase in dividend tax rates.Click here
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