Business owners plan to take special dividends before April tax hike

21% of UK entrepreneurs plan to decrease their dividend pay-outs once the chancellor's tax changes come into effect

In light of the incoming dividend tax increase, over a quarter (28%) of UK small business owners plan to pay themselves a special dividend – according to a new survey conducted by Moore Stephens.

See also: Watch out for new reforms to dividend taxation

Coming into force from April 6, the tax rate on dividends for basic rate taxpayers will increase by 7.5% to 32.5%.

The report also found that more than a fifth (21%) of entrepreneurs plan to decrease their dividend payouts after the tax hike comes into effect with only 6% saying they would increase dividends to sustain their income.

A petition urging chancellor George Osborne not to go ahead with the proposed tax hike has already attracted 57,000 signatures from small business owners, but is still short of the 100,000 signatures it needs to be debated in parliament with the petition closing tomorrow.

Mike Cooper, partner at Moore Stephens, said: “Small business owners are moving quickly to take out money from their businesses at a lower tax rate.

“The changes to dividend tax will hit small business owners very hard – many are on relatively modest levels of income.”

Startups spoke to a number of small business owners to find out what they really think of the dividend tax changes, find out what they had to say here.


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