Business owners are reluctant to take dividend

/ 22 February 2016

David Whiscombe

‘New data has shown that only 3% of SMEs in Scotland are planning to pay themselves a special dividend ahead of tax increases in April. The figure is far lower than the 28% of small company bosses across the UK who will pay themselves a dividend, before the rate on dividends rises by 7.5 percentage points in each tax band, according to a separate study. Experts said small-business owners are moving quickly to take out money from their businesses at a lower tax rate. Providing the accumulated profits are there, it is a perfectly sensible move and undertaken in the right way is something that HMRC has absolutely no issue with; however, small business owners who do not pay a special dividend before April 6 will have missed out, they added.

Sources: The Times, The Independent,  Daily Mail,  The Press and Journal’

It’s not that simple.  In some circumstances, paying a dividend before 6 April can actually increase the amount of tax payable, so perhaps the Scots are displaying some of that legendary canniness.  We’ve prepared a briefing paper explaining the pros and cons.  If in doubt, talk to your friendly BKL account manager.

David Whiscombe


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