The short answer for business owners who are basic rate taxpayers is that paying dividends is nearly always the better option, regardless of changes in the Corporation Tax rate the company pays. This is because dividends do not attract NICs and offer tax advantages for lower rate taxpayers.
However, unlike paying salaries, the business must be making a profit (after tax) to pay dividends.
If you would like more information, please contact your accountant on 0113 2864486.
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With HMRC becoming more spontaneous with tax investigations we strongly suggest that every business is insured against the cost of investigation. So strongly in fact, that we automatically build it in to our fixed fee agreements. Many of our clients have been very grateful for this insurance when HMRC have come knocking.
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The legal and compliance burden put on businesses through the need to submit tax returns and other such documents to strict deadlines is often one of the most stressful elements of running a business.
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