Dividend Allowance cut could cost you £1,143. Is it time to restructure?

For a while, company directors have been able to make a tax-efficient living by taking a combination of salary and dividends due to the generous Dividend Allowance.

However, changes which took effect from 6 April 2018 have cut the allowance from £5,000 to just £2,000.

The changes are meant to level the playing field between the self-employed, directors, shareholders and employees, but if you’re not careful, you could get left behind.

In real terms, the cut will cost directors anywhere from £225 to £1,143 a year, depending on which tax bracket they fall into. It is therefore recommended that you review how you drawdown income from your company to avoid losing out.

This could become complicated if you receive income from multiple sources, for example, shares and savings.

Link: Dividend tax changes in 2018/19: all you need to know

Wilder Coe Ltd
Our mission is to care for each of our clients so that their expectations and goals are met and exceeded. So whether you’re looking for tax minimisation, wealth maximisation or simply a professional service with a personal touch Wilder Coe Ltd’s partner-led approach, combined with a commitment to developing an understanding of your business and a rapport with you and your staff, ensures that you and your business always get the right level of attention and service you need.

We are a multi-faceted practice providing a wide range of professional business services including accountancy, auditing, taxation, corporate business recovery and insolvency services. For more information, please contact us.