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.
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4 July 2019
With a major shake-up in the treatment of VAT in respect of building work is imminent – our Senior VAT Manager, Carolyn Van Hecke, highlights the implications for those in the construction industry and why it has never been so important to apply the correct VAT treatment.