MSE News: Cut to tax-free dividend allowance to be shelved

Legacy_user

Plans to slash the tax-free dividend allowance from £5,000 to £2,000 in April 2018 have been dropped...

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'Cut to tax-free dividend allowance to be shelved'

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eskbanker

Who'd have thought there'd be U turns and concessions when there's a general election coming up....

AnotherJoe

Perhaps all those people whining in the press about how their income would be reduced (because they carelessly hadn't put their investments in an ISA as "there was no need before") will take the time to do that now?

jimjames

AnotherJoe wrote: »

Perhaps all those people whining in the press about how their income would be reduced (because they carelessly hadn't put their investments in an ISA as "there was no need before") will take the time to do that now?

Perhaps those people will also consider their vote and which party is likely to hit them with tax once the election is over...

AnotherJoe

Well, since that would be all of them*, thats not much help.

Unless you are implying Labours manifesto will say something like "we pledge to have a bank holiday every other week, and also raise the dividend allowance to £10,000 so that currently oppressed company directors paying themselves that way to avoid tax, and people with only a couple hundred thousand pounds of dividend paying shares, arent penalised. Vote for us to save the oppressed ! " ?

* TBF I'm not sure about Monster Raving Loony.

veryintrigued

jimjames wrote: »

Perhaps those people will also consider their vote and which party is likely to hit them with tax once the election is over...

We'd need a crystal ball or alternatively T&Cs on manifestos and a Government ombudsman to be bullet proof!

ColdIron

The plans have been dropped from the Finance Bill due to the timescales of the election (and, by happy coincidence, possible political advantage) but there's no certainty that they won't resurface later on. It's created uncertainty for people who have started to make plans, especially with the Money Purchase Annual Allowance changes

Frufru23

I'm a part-owner and employee of a small limited company and receive my salary as a mix of PAYE and Dividends. I'd like to state that I don't do this because I'm trying to avoid tax! In fact, I pay my fair share of tax on PAYE and dividends and on top of that pay corporate tax too.

As an owner/employee of a small company I have no perks.... so no pension contributions, no share save schemes, no private health, no company life insurance.

Unfortunately the (currently suspended) amended to the dividend allowance just makes my net income reduce year on year. It was already vasty reduced when the dividend tax system was overhauled last year.

It annoys me when people/HMRC state that people operating small businesses should be in no better situation than those who work for large companies, corporates etc... however, if I was to take in to account the cost of providing myself with all of the benefits/perks that I would get from being an employee, this would probably outweigh the apparent "saving" that i make on tax.

unfortunately I do wonder whether the constant targeting of entrepreneurs will stop people from taking this career route as it's a minefield.

It also seems that people have a bit of a negative attitude towards people like myself (wrongly) assuming that all company directors/owners are rolling in cash and avoiding tax!

AnotherJoe

Frufru23 wrote: »

I'm a part-owner and employee of a small limited company and receive my salary as a mix of PAYE and Dividends. I'd like to state that I don't do this because I'm trying to avoid tax! In fact, I pay my fair share of tax on PAYE and dividends and on top of that pay corporate tax too.

As an owner/employee of a small company I have no perks.... so no pension contributions, no share save schemes, no private health, no company life insurance.

Unfortunately the (currently suspended) amended to the dividend allowance just makes my net income reduce year on year. It was already vasty reduced when the dividend tax system was overhauled last year.

It annoys me when people/HMRC state that people operating small businesses should be in no better situation than those who work for large companies, corporates etc... however, if I was to take in to account the cost of providing myself with all of the benefits/perks that I would get from being an employee, this would probably outweigh the apparent "saving" that i make on tax.

unfortunately I do wonder whether the constant targeting of entrepreneurs will stop people from taking this career route as it's a minefield.

It also seems that people have a bit of a negative attitude towards people like myself (wrongly) assuming that all company directors/owners are rolling in cash and avoiding tax!

If you pay yourself in dividends you dont pay tax on the first £5k, is that correct?
Whereas if you paid yourself that £5k the "standard" way, you would pay tax on it? Is that correct ?

If thats correct, and maybe I"m wrong as I know very little about that side of tax, it certainly looks to be avoiding tax to me. Which we all do. But please dont pretend you are doing it for some other reason ! (which would be what?).

ColdIron

Don't count your chickens ...

Speaking in the House of Commons this afternoon, the financial secretary to the Treasury Jane Ellison said all of the amendments to the Finance Bill will be legislated for following the election.

‘There has been no policy changes and the government will legislate for the remaining provisions at the earliest opportunity of the new parliament,’ she said.

dunstonh

MSE is wrong. The Govt have confirmed that the dividend allowance and the annual allowance reduction are both going ahead.