As a UK business owner can I receive £5,000 of dividend allowance, tax free?

Yes, a dividend is a payment a company can make to shareholders provided it has distributable reserves. If you’re looking at claiming your £5,000 before the deadline contact our CHW Accountants in Bolton for advice.

From April 6, 2016 each individual has a dividend allowance where the first £5,000 received is taxed at 0%. Any dividends received above this allowance will be taxed at 7.5% for basic-rate taxpayers, 32.5% for higher-rate tax payers and 38.1% for additional-rate taxpayers.  Dividend income received on shares held in a stocks and shares ISA is still tax-free.

If you own your own company you should consider using your £5,000 dividend allowance before 5 April 2017.   As a director and shareholder of your own company you could arrange for your family members to receive dividends from your company to take advantage of this. Spreading dividend income can reduce the tax you pay if that income doesn’t pass through your hands first.

The first step is to ensure your family members hold shares in your company which entitle them to receive dividends. You can give those individuals some of your own shares if you hold sufficient shares yourself.  It may be necessary for the company to issue more shares and different classes of shares.  In giving away the shares you are also giving away your right to capital on a sale or winding-up.  You should only make gifts of shares to your children once they have reached the age of 18.

There are other tax implications such as capital gains tax so you should seek professional advice before gifting shares or reorganising share capital.

For more help with finances call 01204 534 031 or contact our Accountants in Bolton via our enquiry form.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

DID YOU FIND THIS USEFUL?

Share it with your network:  

Want more great content?
Sign up to our newsletter

Follow us

Tweets by @CHW-accounting

CHW-Accounting
@chw-accounting


Twitter: chw_accounting

Read enough?

Want to find out how we can help you and your business? Get in touch today and let's have a chat.

WHAT'S THE NEWS?

Grab a biscuit and a brew and read our latest news.

11 November 2019

HMRC Enquiries – beware if you have a cash...

by

Even in this digital age some businesses remain heavily reliant on cash transactions. HMRC views these as high risk and as a result targets cash businesses with VAT enquiries, using special techniques to justify investigating them.


Read more >

6 November 2019

Did Making Tax Digital for VAT (MTDfV) pass its...

by

The first big deadline for MTDfV is history and whilst there was a fairly high failure rate, it was not as bad as originally feared.


Read more >

29 October 2019

Business property relief (BPR) don’t let it disappear

by

BPR shelters the value of your business from the HMRC. The trouble is though, when you retire from your unincorporated business, the relief disappears immediately. CHW explain how you can preserve it.


Read more >

22 October 2019

How to enhance tax and NI-free termination payments

by

New rules will apply to employment termination payments from 6 April 2020 meaning that some settlements will be subject to NI in addition to tax. With this in mind, CHW look at how you can you improve the tax and NI efficiency of a termination settlement.


Read more >

14 October 2019

Paying a non-executive director

by

You’ve engaged the services of a non-executive director (NED) who has experience in growing companies. The NED is freelance and has asked for her fees to be paid free of tax and NI. CHW explain whether that’s ok or if trouble with HMRC is on the horizon.


Read more >

YOUR CHALLENGES

No matter what your challenge is, we’ve probably dealt with it before.



Need an Accountant?

Get in touch >


Need an Accountant?

Get in touch >


Tax issues?

Find out more >


Tax issues?

Find out more >


Trying to grow your business?

We can help >


Trying to grow your business?

We can help >


Managing cashflow?

We can help >


Managing cashflow?

We can help >


Starting a business?

We can help >


Starting a business?

We can help >


Looking for funding?

Need help with funding? >


Looking for funding?

Need help with funding? >


Buying or selling a business?

We can help >


Buying or selling a business?

We can help >


Adopt the cloud?

We can help >


Adopt the cloud?

We can help >


What else can we do for you?

We can help >


What else can we do for you?

We can help >
CONTACT US

Get in touch, no hard sell, just a brew, a biscuit and a chat.