Key Corporate Budget changes - 2015
- The Chancellor has attacked the way that you can pay yourself.
- Most company directors pay themselves a basic salary and top it up to £42,385 by paying a dividend. This now needs to be reviewed.
- From April 2016 the Dividend Tax Credit will be abolished. To replace this, a new Dividend Tax Allowance of £5,000 per tax year will be introduced.
- The new rates of tax on dividend income will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate tax payers.
- However, the announcements were not accompanied by any detail so the impact of this change will become clearer as further documents are made available.
- When I get more detail I will advise you on strategies to minimise the tax increase
- The Employment Allowance which currently reduces your Class 1 NI will increase from £2,000 to £3,000 from April 2016. Also companies where the director is the sole employee will no longer be eligible to claim the Employment Allowance from April 2016.
- The Corporation Tax rate will reduce from 20% to 19% from 2017. A further reduction to 18% will follow in 2020.
Kind regards,
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