Dividend Tax is changing from April 2016 so now is the time to plan if proposing additional dividends in March 2016 could save you money.
From April, dividend tax credits will be abolished and a new taxation method brought in starting at 7.5% on all dividends over £5,000. Currently basic rate tax payers have no additional tax to pay on dividends received.
For higher rate tax payers the effective rate will rise from 25% to 32.5%. For additional rate tax payers the effective rate rises from 30.6% to 38.1%.
This means that in most cases there will be a rise in personal tax for contractors drawing dividends through a limited company and tax.