Chartered Management Accountants and Consultancy Services for Small and Medium Sized Businesses

Tax on dividends from 6th April 2016

From the 6th April 2016 , tax payers will pay an additional tax on dividends received, above £5,000 in the tax year.

This will place an extra tax on many small business owners.

Consider accelerating your existing planned dividends, and declare an extra dividend before 6th April 2016.

Ensure that your business has sufficient undistributed reserves, in order that the dividend is legal.

Don’t just rely on your last published accounts.

Take into account any dividends declared after your last accounts.

Prepare interim or management accounts, to as near the end of March 2016 as practically possible.

You will need all this information to decide if your business has sufficient distributable reserves , to declare a dividend.

Review your planned dividends for the next tax year.

Then you will also need to assess your expected taxable income for the 2016 tax year.

Then work out if there is a tax saving by ‘shifting’ next tax year’s dividends , by declaring them in the current tax year.

As always, working through the numbers is vital, if a tax saving is to be achieved.


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