Dividend Changes Tax Year 2016/17 - what are we all doing?
Discussion
I am sure that most business owners are aware of the impending changes to Dividend taxation in the next tax year.
Does anyone know what they are going to do to alleviate the extra tax?
We were thinking of declaring a large dividend at the end of this tax year, and charge it to director's loan accounts, therefore (we think) it would be at the old rates at whatever time it was repaid to us by the company.
Anyone else with early solutions? Obviously, this doesn't replace the good advice from a good accountant, to which we are availing ourselves of.
The reason for asking is that our financial year is closing shortly, so we were going to do something significant, we need to plan and budget it in now.
Does anyone know what they are going to do to alleviate the extra tax?
We were thinking of declaring a large dividend at the end of this tax year, and charge it to director's loan accounts, therefore (we think) it would be at the old rates at whatever time it was repaid to us by the company.
Anyone else with early solutions? Obviously, this doesn't replace the good advice from a good accountant, to which we are availing ourselves of.
The reason for asking is that our financial year is closing shortly, so we were going to do something significant, we need to plan and budget it in now.
CR0X said:
I am sure that most business owners are aware of the impending changes to Dividend taxation in the next tax year.
Does anyone know what they are going to do to alleviate the extra tax?
We were thinking of declaring a large dividend at the end of this tax year, and charge it to director's loan accounts, therefore (we think) it would be at the old rates at whatever time it was repaid to us by the company.
Anyone else with early solutions? Obviously, this doesn't replace the good advice from a good accountant, to which we are availing ourselves of.
The reason for asking is that our financial year is closing shortly, so we were going to do something significant, we need to plan and budget it in now.
That's a good question Tim and I'm currently awaiting and answer from my accountants.Does anyone know what they are going to do to alleviate the extra tax?
We were thinking of declaring a large dividend at the end of this tax year, and charge it to director's loan accounts, therefore (we think) it would be at the old rates at whatever time it was repaid to us by the company.
Anyone else with early solutions? Obviously, this doesn't replace the good advice from a good accountant, to which we are availing ourselves of.
The reason for asking is that our financial year is closing shortly, so we were going to do something significant, we need to plan and budget it in now.
As I understand it a larger dividend is OK but if you declare a very large dividend during tax year 16-17 and let's assume it goes then straight into the loan account. If you are already drawing quite a healthy dividend combined with other income from say with rent or whatever I assume that will take you into silly tax rates?
So in fact I'm not sure declaring a larger dividend will work for all
My account's first take was that all of the tax planning they had been working on for many clients over the last however many years has now been destroyed
I suppose the dividend route is still attractive but not as good as it was and will be interesting to see what figures my accountants come up with.
I was told at the time of the budget there was an element of small print that need qualifying with the IR, not sure if that's been sorted yet.
I'm sure Eric will be along shortly to help us
Pretty much what you said, which is exactly what we did before the 50% tax rate came in, kept us going for 3 years after that. We plan a large divi at the end of March 2016 and will lend most back to the business. Our year end is Dec, so don't worry too much about the company year end. just the personal tax year (shareholders funds permitting ofcourse)
I reckon George is banking on this happening so he can declare a reduction in the budget deficit whilst keeping his fingers crossed that the economy keeps growing.
There are other tax planning schemes out there but quite frankly I'd steer clear. We are in an age where you need to pay what you owe and suck it up, or have sleepless nights worrying about HMRC coming knocking (assuming you have a conscious that is
)
Having said that, if you don't mind taking some risks, then I'd recommend an EIS scheme, very tax efficient but you could lose your money.
I reckon George is banking on this happening so he can declare a reduction in the budget deficit whilst keeping his fingers crossed that the economy keeps growing.
There are other tax planning schemes out there but quite frankly I'd steer clear. We are in an age where you need to pay what you owe and suck it up, or have sleepless nights worrying about HMRC coming knocking (assuming you have a conscious that is
)Having said that, if you don't mind taking some risks, then I'd recommend an EIS scheme, very tax efficient but you could lose your money.
HoHoHo said:
That's a good question Tim and I'm currently awaiting and answer from my accountants.
As I understand it a larger dividend is OK but if you declare a very large dividend during tax year 16-17 and let's assume it goes then straight into the loan account. If you are already drawing quite a healthy dividend combined with other income from say with rent or whatever I assume that will take you into silly tax rates?
So in fact I'm not sure declaring a larger dividend will work for all
My account's first take was that all of the tax planning they had been working on for many clients over the last however many years has now been destroyed
I suppose the dividend route is still attractive but not as good as it was and will be interesting to see what figures my accountants come up with.
I was told at the time of the budget there was an element of small print that need qualifying with the IR, not sure if that's been sorted yet.
I'm sure Eric will be along shortly to help us
Don't forget the new divi tax rules don't kick in until April 16, so they are still as attractive for the time beingAs I understand it a larger dividend is OK but if you declare a very large dividend during tax year 16-17 and let's assume it goes then straight into the loan account. If you are already drawing quite a healthy dividend combined with other income from say with rent or whatever I assume that will take you into silly tax rates?
So in fact I'm not sure declaring a larger dividend will work for all
My account's first take was that all of the tax planning they had been working on for many clients over the last however many years has now been destroyed
I suppose the dividend route is still attractive but not as good as it was and will be interesting to see what figures my accountants come up with.
I was told at the time of the budget there was an element of small print that need qualifying with the IR, not sure if that's been sorted yet.
I'm sure Eric will be along shortly to help us
foliedouce said:
HoHoHo said:
That's a good question Tim and I'm currently awaiting and answer from my accountants.
As I understand it a larger dividend is OK but if you declare a very large dividend during tax year 16-17 and let's assume it goes then straight into the loan account. If you are already drawing quite a healthy dividend combined with other income from say with rent or whatever I assume that will take you into silly tax rates?
So in fact I'm not sure declaring a larger dividend will work for all
My account's first take was that all of the tax planning they had been working on for many clients over the last however many years has now been destroyed
I suppose the dividend route is still attractive but not as good as it was and will be interesting to see what figures my accountants come up with.
I was told at the time of the budget there was an element of small print that need qualifying with the IR, not sure if that's been sorted yet.
I'm sure Eric will be along shortly to help us
Don't forget the new divi tax rules don't kick in until April 16, so they are still as attractive for the time beingAs I understand it a larger dividend is OK but if you declare a very large dividend during tax year 16-17 and let's assume it goes then straight into the loan account. If you are already drawing quite a healthy dividend combined with other income from say with rent or whatever I assume that will take you into silly tax rates?
So in fact I'm not sure declaring a larger dividend will work for all
My account's first take was that all of the tax planning they had been working on for many clients over the last however many years has now been destroyed
I suppose the dividend route is still attractive but not as good as it was and will be interesting to see what figures my accountants come up with.
I was told at the time of the budget there was an element of small print that need qualifying with the IR, not sure if that's been sorted yet.
I'm sure Eric will be along shortly to help us
Now I'm one to pay my way however I believe I already pay more thinly fair share/take risks etc. and it's one more reason to just move on now I'm the wrong side of 50.
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