Tax dividend bombshell needs to be addressed

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​BUSINESS OWNERS and investors must plan ahead to counter wide-ranging changes to the tax on dividends next month, warn​ed​ Yorkshire accountan​cy firm​ ​​Garbutt + Elliott.

There are less than two weeks left to mitigate potential losses before changes to the dividend tax come into force on April 6.

Rob ​​​​Durrant-Walker, tax specialist with Garbutt + Elliott​, said: “Whilst the Chancellor George Osborne is honouring his promise not to raise the headline rates of personal tax and national insurance, he is hitting owner-managed busine- sses.

“The introduction of the significantly higher tax on dividends will hit many owner-managed companies hard. It was a bit of a bombshell at the time and now the harsh reality will start to hit home.​“

​Garbutt + Elliott, which has offices in York and Leeds, said that the increased tax rate on dividend income, set at 7.5​ per cent​ for basic rate taxpayers, 32.5​ per cent​ for higher rate taxpayers and 38.1​ per cent​ for additional rate taxpayers is equivalent to an increase of 7.5​ per cent​ where dividend income exceeds £5,000.

​“​Many small owner-managed businesses may have to pay thousands more a year in taxation, which will be accounted for via self-assessment​,” said Mr ​​Durrant-Walker​.​