New Dividend Tax
This month’s budget contained a bit of a shock, a new way of taxing dividends.
No all the details are available yet so I won’t go into the ins and outs but this is likely to cost the typical owner of a small limited company over £2,000 a year, perhaps more when we know the full details.
That’s the equivalent of £175 a month and to put that into perspective, if you paid that off your mortgage every month you could repay it 7-8 years earlier. If you are new our young business, this could be a significant chunk out of your pension pot.
We are advising clients to do two things:
Action 1 – Profit Improvement Plan
One way to respond to the new tax of dividends is to review your business for ways to increase profit.
The idea is that you make more profit so that after tax you are no worse off. You may even be better off!
Use this calculator and see what potential your business has https://www.sackmans.co.uk/profit-improver/
Action 2 – Carry out a financial planning review
Any change in taxation like this should trigger you to look at your financial plans. You may want to tweaks a few things in response.
Now is the perfect time to have a review before the new tax kicks in April next year. I can either do this with you, for you or let you create your own plans using a simple but powerful software package.
For more information email me firstname.lastname@example.org