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Dividend allowance - use it or lose it!

Matthew Grief

If you have not already taken a dividend from your company during the 2017/2018 tax year please be aware that to benefit from the £5,000 dividend allowance (0% tax rate) a dividend needs to be taken on or before 5 April 2018. 

If this allowance is not used by the end of the current tax year it will be lost forever.  This is now even more significant as the dividend allowance is being reduced to £2,000 as from 6 April 2018 (as a result of which tax payers will be worse off by £225 at basic rate, £975 at the higher rate and £1,143 at the additional rate). 
This should be considered alongside utilising basic rate tax bands available and possibility of making pension contributions to minimise your overall tax position.
Where your income levels are close to the £100,000 limit, after which the potential effective rate of tax rises to 60%, it is important to contact us for specific advice as in such circumstances taking a dividend, even where covered by the dividend allowance, may not be as tax efficient.

To find out more, please contact your usual Moore advisor