Tax on Dividends

Tax on Dividends

As a director of a company you may decide to distribute company profits to the shareholders – a payment of this kind is called a dividend. However dividends are subject to tax and are determined in relation to the individual’s income band as follows:

Dividend income in relation to the basic rate or higher rate tax bands 2015-16 Dividend tax rate applied after deduction of Personal Allowance and any Blind Person’s Allowance
Dividend income at or below the £31,785 basic rate tax limit10%
Dividend income at or below the £150,000 higher rate tax limit 32.5%
Dividend income above the higher rate tax limit 37.5%

Not paying dividends

If you are looking to not pay dividends you will need to speak to a tax professional to gain tax planning advice as to the best way to extract profit from your limited company. The Sovereign Corporate business opportunity can assist in this.

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