Have you used your full dividend allowance?

If you are an entrepreneur and a shareholder, and have not already received dividends from your company in the year, consider extracting a dividend before 5 April 2018 as the dividend nil rate band of £5,000 is dropping to £2,000 from 6 April 2018. This allowance is available to everyone, regardless of whether a higher or additional rate taxpayer, so don’t miss out on tax free dividends.

It may also be beneficial to gift dividend-producing shares to a spouse or civil partner to make full use of two allowances for current and future years, but careful consideration is required in doing this.

Dividends in the basic rate are taxed at just 7.5%, meaning this form of income remain tax efficient even after the recent rate increases, so be sure this band is utilised in full before the end of the tax year.


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