What has changed
The tax free dividend allowance is now just 500 pounds, down from much higher levels in recent years, and dividend tax rates have risen. For directors and investors outside an ISA, more dividend income is now taxable.
Who it affects
Company directors who pay themselves in dividends, and investors holding shares outside an ISA.
What you should do
Review your salary and dividend mix for the year, use ISA allowances where you can, and plan dividends around the remaining allowances. Do not assume last year's split is still the most efficient.
Our view
With the allowance this small, the old set and forget approach to director pay no longer works. A yearly review is now worth real money.
Common questions
Who does this affect?
Company directors who pay themselves in dividends, and investors holding shares outside an ISA.
What should I do about it?
Review your salary and dividend mix for the year, use ISA allowances where you can, and plan dividends around the remaining allowances. Do not assume last year's split is still the most efficient.
Can TaxTune help me with this?
Yes. Tell us your situation through the quote builder or book a free call, and we will explain exactly what it means for you and handle it if you would like.
Related services and guides
How directors pay themselves Salary vs dividends Limited company accounts