Dividend Allowance cuts – is it time to restructure?

For some time, company directors have been able to make a tax-efficient living by taking a combination of salary and dividends due to the generous Dividend Allowance.

However, changes which took effect in the new tax year have cut the allowance from £5,000 to just £2,000.

The changes, which came into force from 6 April 2018,  are meant to level the playing field between the self-employed, directors, shareholders and employees, but if you’re not careful, you and your clients could get left behind.

In real terms, the cut will cost directors anywhere from £225 to £1,143 a year, depending on which tax bracket they fall into.

Now could be a good time to review how you drawdown income from your company to avoid losing out.

This could become complicated if you receive income from multiple sources, for example, shares and savings.

At Moore Thompson, we can provide you and your clients with expert advice on the most tax efficient business structure for your particular circumstances. For further information, please contact us.