Does the end of the dividend as we know it signal a shift from entrepreneurship to big business, asks Dominic Slattery, managing director, OneE Group, who outlines some of the options for business owners reconsidering their remuneration arrangements
The spirit of entrepreneurship and innovation is the backbone of the UK economy. Small and medium-sized businesses create jobs, wealth and skills which builds a richer more diverse UK plc. As such, the government’s recent move to increase dividend rates from April 2016 raises significant questions. Why is this being driven? Who will it affect? Who will it benefit? And indeed – will it work?
When the Chancellor, George Osborne, introduced the measure in the Summer Budget, it was presented as a tax-free allowance and many taxpayers assumed that the £5,000 dividend allowance would sit outside their tax rate band. However, HMRC has since revealed that this is not the case. Indeed, dividends within the allowance will still contribute towards basic and higher rate tax.
