The Marriage Allowance

Many couples are unable to benefit from the Marriage Allowance; AND the maximum benefit is only £238 (2018/19).  But it’s simple to calculate and to claim. It is for Married Couples and Civil Partnerships where one is a Basic Rate Taxpayer (taxable income £11,850...

What is Dividend Tax?

Dividend tax is the unpopular income tax that came into effect in April 2016. Before then tax wasn’t paid on dividends unless you were in the Higher Rate tax bracket. Now Basic Rate taxpayers have had to pay 7.5 pence on every £1 received as dividends – and...

Child Benefit Clawback needs ITR

Any household where a parent or their partner has an individual income of more than £50,000 will see at least some of their child benefit clawed back due to the High Income Child Benefit charge. If you have chosen to continue receiving child benefit payments then...

How does paying dividends reduce my Company’s tax bill?

It doesn’t.  A Company pays Corporation Tax on its profits before dividends are paid out.  Consequently, shareholders are treated as having already paid tax on their dividends (called a ‘tax credit’). A shareholder who is paying Higher Rate Tax will have the dividends...

A recent history of Corporation Tax Rates

In recent years, for small companies the Corporation Tax Rate has effectively increased from 20% to 25.07% (small UK business had a 6% rise in tax on profits – including dividend tax!).  Whereas, from 2006/07 to 2017/18, the main Corporation Tax Rate (for more...

Can I pay my wife “wages” to save my business tax?

Many business owners pay their spouse a salary – typically up to the Personal Allowance limit (£11,850 in 2018/19). If the spouse has no other taxable income, they will not pay tax on their salary – and the business owner saves tax (at 19%, 20% or 40%) on the salary...