BUSINESS OWNERS and investors must plan ahead to counter wide-ranging changes to the tax on dividends next month, warned Yorkshire accountancy 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.