There are dividend tax planning options which can be taken before 5 April 2016 to extract as much as possible before the changes take effect:

I am advising clients who have profit and loss reserves as follows:

  • If they are basic rate taxpayers
    • to draw as much as possible within the basic rate tax band
    • this will save 7.5% tax should they leave it until next year
  • For higher rate taxpayers
    • Any additional funds avialable will “only” attract a 25% charge before 5 April and 32.5% after, so better to take now

The next two videos look at the reserves on the profit and loss account and the balance sheet

The biggest perceived loss is to basic rate taxpayers who were not paying anything before so well worth utilising the full £42k basic rate tax band.  Every taxpayer has a different situation so you should seek professional advice before taking any steps based on the contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”