For many years now, owner managers have enjoyed reasonable tax rates on extracting dividend income from their companies. Indeed, the vast majority of owner managers have continued to pursue a ‘low salary/high dividend’ model of income extraction.

In the Summer Budget 2015, the Treasury told us that the imputation system of taxing dividends was no longer sustainable since it was ‘designed more than 40 years ago when corporation tax was 50% and the total bill on dividends for some was over 80%’. Most tax pundits expected some levelling of the ‘fiscal’ playing field since we had got to the stage where earnings were taxed more heavily than dividend income.

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