Business Owners to Pay Themselves Special Dividends Ahead of Tax Hike
Over 50,000 small enterprise owners have backed a petition against George Osborne’s plans to increase dividend tax by 7.5% from April 6th
More than a quarter (28%) of UK small business owners are planning to pay themselves a special dividend ahead of the forthcoming dividend tax hike in April, according to a report by Moore Stephens.
Announced earlier this year as part of the Summer Budget, the tax rate on dividends for higher earners will increase from 25% to 32.5% – with the rate for additional tax payers increasing from 30.56% to 38.10%.
The survey of business managers also found that over a fifth (21%) of small business owners will reduce their dividend pay outs once the changes come into force, while just 6% expect to increase dividends to maintain their net income.
The news follows an ongoing petition calling on George Osborne to reconsider the changes to dividend tax. The petition has now been signed by over 57,000 small business owners but needs 100,000 signatures in order to be debated in Parliament.
Mike Cooper, partner at Moore Stephens, said
“Small business owners are moving quickly to take out money from their businesses at a lower tax rate.
“The changes to dividend tax will hit small business owners very hard – many are on relatively modest levels of income.”