For those owner-managers of smaller companies in particular, the announcement of a 2% increase in the basic and higher tax rates on dividends will once again throw the calculation of how they take their income into the spotlight. The announcement of higher corporation tax rates two years ago swung the pendulum towards taking a higher level of salary; last year’s increase in employers’ national insurance swung it back the other way. Yesterday’s move will require a further assessment.
For landlords, this is the latest in a number of blows, coming so soon after the Renters’ Rights Bill came into law. With the 2% hike in tax rates being across the board (including additional rate), landlords will probably seek to increase rents accordingly, which will impact on cost-of-living and inflation. But it could have been worse: the threatened imposition of national insurance on rental profits did not materialise.
For savers, there is no way of avoiding the higher taxes, other than ensuring you make full use of the annual ISA allowance.
