If it is the intention to take out more in dividends from 6 April 2016, then taking out a bigger pay-out before 6 April may be a smart move. However, the overall remuneration package needs to be considered not just dividends so it is best to seek tax advice before the tax rate changes.
SMALL BUSINESS owners are in a race against time to benefit from a special dividend pay-out, as the government looks to raise the tax rate in April, a top-ten accountancy firm has revealed. Moore Stephens has found that 28% of all SME owners plan to cash in via a dividend pay-out before 6 April, when the tax rate on dividends for higher rate taxpayers increases from 25% to 32.5%. For many SMEs that earn a modest amount of income, their tax rate will surge from 30.56% to 38.10%, a dividend tax hike of some 7% for all middle and high rank earners.