The Summer Budget contained a major change on the way in which dividends are taxed which will impact on the vast majority of small and medium sized business owners.
At this stage the details are not known as there has not yet been a Budget Impact Note released about this change. This may indicate that the treasury are uncertain as to how it will work in practice.
What we do know is that there will no longer be a tax credit on dividends, but there will be a tax exemption for the first £5,000 of dividends.
The rules do not take effect until April 2016 and will be set out in Finance Act 16.
As soon as the budget note is released our tax experts will be working on tax efficient opportunities for our clients.
If you would like to discuss this further please contact our senior tax manager, Sarah Bowen, or your usual director.