An image of coins stacked on a desk in our tax changes news piece

Dividend tax blow announced for shareholders and business owners

Last month’s Budget saw the news that business owners who pay themselves in the form of dividends, rather than a salary, will see their tax-free allowance cut from £5,000 to £2,000.

The announcement also affects investors who have portfolios of shares held outside Isas or pensions.

The change will come into effect in April 2018.

Alan Mellor said: “This announcement will come as a blow to shareholders and business owners who are going to be paying more tax.

“Whilst there is not a lot we can do to combat the change, we invite clients to contact us and see what their options are.”

Philip Hammond said investors will benefit from the recently revised increase in the Isa allowance, implemented on April 6th, to £20,000 and a further increase in the tax-free personal allowance to £11,500.

The higher rate income tax threshold has also risen from £43,000 to £45,000.

And although it has since been withdrawn, Alan Mellor said business owners need to stay aware of their tax structures, with the chancellor initially announcing a rise in Class 4 National Insurance contributions for the self-employed.

“It’s on the Government’s radar, so could be revised at any point,” Alan said.

Alan Mellor can be contacted on 0151 353 1066.

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