The new rules governing the taxation of dividends are set to take effect in relation to dividends received after 5 April 2016. The changes include:

– a £5,000 dividend nil rate (also known as the ‘dividend tax allowance’ (DTA)), which will effectively tax at the nil rate, the first £5,000 of taxable dividend income (i.e. after deducting the personal allowance, but treating dividends as the top slice of income, so the personal allowance is used last against dividends). Any dividends above the first £5,000 will be taxed as if…

HMRC have recently published the latest addition to their tax avoidance guidance series, entitled Employee Bonus Schemes: Growth Securities Ownership Plan and other avoidance schemes based on contracts for difference (Spotlight 28). The Spotlight guidance confirms that, in HMRC’s opinion, growth securities ownership plan schemes do not work and any payment made by an employer to an employee on the maturity of the contract for difference should be taxed as employment income and subject to PAYE income tax and National Insurance contributions (NICs).

Broadly, under this type of arrangement,…

From 6 April 2016, the personal savings allowance (PSA) will allow basic rate taxpayers to receive up to £1,000 of savings income tax-free. For higher rate taxpayers, this limit will be £500. HMRC have published guidance setting out details of what counts as savings income and how the allowance will be calculated, including some useful examples.

Savings income includes account interest from:

– bank and building society accounts;
– accounts with providers like credit unions or National Savings and Investments.

It also includes:

– interest distributions (but not dividend distributions) from authorised unit…

The Chartered Institute of Taxation (CIOT) has recently warned that Government plans to exclude one-person businesses from claiming the national insurance Employment Allowance (EA) from April 2016 will be too easy to dodge.

The Institute says that the planned curbs are easily avoided, either by appointing another director, such as a spouse, civil partner, other family member or friend, and paying that person a token wage; or by arranging payments of earnings so that the worker is not a director when at least one of the payments is made….

The government has recently launched its campaign to promote the introduction of the new national living wage (NLW), which will take effect from 1 April 2016. From that date workers in the UK aged over 25 earning the minimum rate of £l;6.70 per hour will see a 50p increase in their minimum hourly rate, which is set to rise to £l;7.20 per hour.

The NLW will be enforced by HMRC alongside the national minimum wage (NMW), which they have enforced since its introduction in 1999.

The NMW is the minimum…