I was having a chat with a potential client last week, who didn’t know what the tax-free dividend allowance was and consequently hadn’t declared any dividends in his first year.
So I thought I would record a quick video, to make sure you know:
Are you using your tax-free dividend allowance?
The tax-free dividend allowance is a HMRC allowance and with tax rates rising we want to take advantage of all the allowances we can.
This means that you can declare an amount of dividends each year, where no tax will be paid. This has been £2000 for a couple of years to the 22-23 tax year, sadly reducing to £1000 in the 23-24 tax year and £500 in the 24-25 tax year.
With tax rates rising, we want to make sure we use all the allowances we can.
So if you run a Limited company and there are enough profits in the business, you may want to declare these dividends as a minimum.
You have extracted money out of the business, it will go on your tax return and there will be no tax to pay on these amounts. Happy days!
If you’re not getting the support you need from your current accountant, please get in touch and we can have a chat so I can find out more about you and your business.
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