This year (2016) might be the time to hand in your notice and do your own thing as the government is being very generous (no sarcasm).
Most already know that owners of small companies will benefit from:
- an increase in the National Insurance Employment Allowance to £3,000
- a permanent increase to the Annual Investment Allowance to £200,000 from January 2016
- increases to the tax-free Personal Allowance to £11,000
- an increase to the Higher Rate Threshold to £43,000
But did you know that there is also a commitment to go much further? It claims to be taking the Personal Allowance to £12,500 and the Higher Rate Threshold to £50,000 by the end of this Parliament. Bit too close to the elections for my liking.
OK, so dividend taxation (relevant to limited companies) is taking a hit from April 2016 but the reforms “…will significantly reduce the incentives for people to set up a company and pay themselves through dividends rather than wages simply to reduce their tax bill….Those who choose to work through a company continue to pay lower rates of tax than the employed or self-employed. But the reforms move the overall tax rates for the self-employed and those incorporated closer together, making the system fairer overall.”
For those affected by the dividend palaver, there is a petition (closing Feb 2016) HERE. Do add your details if you please; the more, the noisier.
In the meantime, if you need guidance on how to manage the dividend situation between now and April so you don’t get caught out, get in touch via the contact page or email email@example.com.