Did you know that from 6 April 2016 all taxpayers have been able to pay 0% tax on up to £5,000 of dividend income each tax year? In addition, basic rate taxpayers can pay 0% tax on up to £1,000 of interest income each tax year, whilst higher rate taxpayers can pay 0% tax on up to £500 of interest income each tax year.
As these are annual allowances, if you don’t use them you lose them, so advice should be sought from professionals on how to plan for and make full use of the zero rate tax allowances that are available.
Owner managed businesses in particular should make sure that, where possible, they are distributing profits and paying interest on credit loan balances to ‘top-up’ any dividends and interest the owners receive from their other investments.
For further advice on these allowances and to find out how we can help you, please contact your usual Moore Stephens adviser.