Tax Free Dividend Allowance is set to fall in April 2018
We are advising our clients to be sure to make the most of this year’s tax free dividend allowance before it falls by 60%, which is anticipated to happen in April 2018.
What is a Dividend?
A dividend is a distribution to shareholders of post-tax retained profits. This is built up in a limited company’s accounts from the date of its incorporation.
Changes to Tax Free Dividend Allowance
However, in a measure designed to reduce the tax gap between those who are employed and those who run their own Limited Companies the Chancellor has announced that the current £5,000 annual dividend allowance will be reduced to £2,000 with effect from 6 April 2018. The effect of this will be to increase the tax charged on many individuals in owner managed businesses by 7.5% of £3,000. A further tax charge of £225 per person per annum.