Taking Dividends

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If you have only recently formed your company or are still thinking about the best way to proceed, the idea of taking dividends may be new to you.  Like everything else about your new company and its record keeping, we make it simple and stress free.  We will work with you to work out how to use dividends to reduce your tax and improve your take-home income.

Have you thought, for example, of having a second shareholder, in addition to yourself?  This would mean that each of you can take dividends, effectively spreading the income of what would normally be one employee between two shareholders.  This can save large amounts of higher rate Income Tax (in addition to National Insurance Contributions savings).

If your income in a tax year is already close to the higher rate limit, currently £43,875, but your income for the next year is expected to be less, you can defer taking more dividends until after 5 April (the start of the new tax year).  The deferred dividend will then fall in the next tax year and this may also save higher rate tax.