There are now only a few days left until the end of the tax year, so what can you do save tax?
The Dividend Allowance was introduced in April 2016 and it allows you to take £5,000 in dividends tax free.
As announced at Spring Budget 2017, the government will legislate in Finance Bill 2017 to reduce the tax-free allowance for dividend income from £5,000 to £2,000.
So in 2016/17 and 2017/18 you need to take the £5,000 because in 2018/19 its dropping to £2,000 and most people expect it to disappear in 2019/20.
Dividends above the allowance are taxed as follows:
- 7.5% on dividend income within the basic rate band
- 32.5% on dividend income within the higher rate band
- 38.1% on dividend income within the additional rate band
Marriage Allowance lets you transfer £1,100 of your Personal Allowance to your husband, wife or civil partner – if they earn more than you.
This reduces their tax by up to £220 in the tax year (6 April to 5 April the next year).
To benefit as a couple, you (as the lower earner) must have an income of £11,000 or less. You can calculate how much tax you’ll pay as a couple.
You can earn £8,060 without paying any Tax or National Insurance or £11,000 Tax Free.
If you own a company and haven’t taken these allowances why not?