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Dividends

Posted on 18/09/2015 at 00:00

Many of our company clients will be aware of the standard practice of paying dividends up to the basic rate each year.  Currently, so long as the gross dividend does not exceed the basic rate band, no higher rate is due from the Director/shareholder.  However, from April 2016, the current dividend tax credit system is to be replaced with a new dividend tax allowance of £5,000 a year.

Dividends above the limit will be subject to tax as follows:

Basic rate taxpayers

7.50%

Higher rate taxpayers

32.50%

Additional rate taxpayers

38.10%

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