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Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

NOVEMBER 2015 - No apologies - once again!

I make no apologies for once again drawing to your attention the changes to the taxation of dividends due to take effect from 6 April 2016. You can read more about this in our News Article from 16 November – ‘Reform of Dividend Taxation from April 2016’.

If you are an owner/manager of a private company and have regularly received dividends you may want to consider if it makes financial sense to have higher dividends in the current tax year before 6 April 2016.

Accelerating dividend payments will almost certainly save you income tax as the rates of dividend tax applying in 2015/16 will be lower than those applying in 2016/17. Equally it will certainly mean that you will pay tax one year earlier on these advanced amounts than you would normally.

On the date a dividend is declared the company must have sufficient distributable reserves available. You may need to talk to us as reserves means more than just having enough cash in the company bank account.

It will come as no surprise that we can be pretty sure that HMRC will pay close attention to the exact date dividends are paid (and that includes credited to any loan account you may have with your company) when this date is around the turn of the tax year. You will need to make sure you have documented the dividends and have a clear paper trail.

Slipping up on any of these details has the potential to increase your tax liability and also gives HMRC an excuse to ask further questions about either the company’s tax affairs or your own.

You can get help with any of the above from your usual FD contact.