Dear All,
Jeremy Hunt’s Budget was probably less shocking than some feared. That said the increase in corporation tax to 25% (from 19%) will be quite a big change for many of our clients, along with the increased tax rate on dividends that was introduced this year. The top rate of tax on distributed profits for an owner managed business is now well over 50%.
The other thing that catches our eye is that the capital gains exemption is being cut to £3,000 per annum (by 2024) and soon only the first £500 per annum of dividends will be tax free (currently £2,000). When the dividend allowance was reduced from £5,000 to £2,000 we found quite a number of clients with savings (typically retired clients with some stocks and shares) were brought into the tax return system. We have no doubt that the reduction in these allowances will drag more taxpayers into the tax return system which, given HMRC seems to be struggling badly with current workloads, is quite worrying.
In any case, a glossy summary can be found here – CLICK BELOW –
Please get in touch with your usual contact at our firm with any questions, or ask for me.
Best wishes
Donald Parbrook
Head of Tax
