What Happened, What it Means, What it Means For You
Chancellor Phillip Hammond has recently announced cut in the tax free dividend allowance from £5,000 to £2,000. As Mr Hammond said that this is to bring down tax differential between the self-employed and employed. To compensate for the reduction, the amount of ISA Allowance is increased to £20,000.
With the growing number of self-employed in Britain and many being paid in dividends rather than salaries, it is needless to say that the move will hit them first. Many start-ups and self-employed rely on dividend as their sole source of income. Small investors have always played an important part in economy and this has been well understood. Less than two years ago Hammond’s predecessor George Osborne introduced the £5,000 allowance for the first time . In July 2015 Budget Mr Osborne scrapped in dividend tax credit and brought in allowance instead, announcing that this would mean that 85 percent of investors would see a reduction in the amount of dividend tax they pay.
It is understandable that there should be no difference in tax paid between the self-employed and employed. There is however strong feeling that the government is sending mixed signals at the time of the increasing demands that are put on British business. Now more than ever British entrepreneurs would appreciate steady course and acts of encouragement to invest in infrastructure and be ready to sustain demands of British markets, when we stand alone.
Read more: Budget 2017: Tax-free dividend allowance slashed http://www.bbc.co.uk/news/business-39211142