A Banbury tax expert is urging small business owners and investors to take stock after being hit by the Government’s summer budget.
Owen Kyffin, a director and leading authority on tax matters at Whitley Stimpson, the largest independent accounting company in the M40 corridor, says: “Small business owners have been hit with a double whammy – a hike in their costs through an increased minimum wage and a bigger tax bill if owners pay themselves through taking dividends rather than salary.
“There are a number of options open to them if they want to reduce their tax bill. It is a complicated situation and small business owners would be well advised to seek advice.
“Similarly, investors with a large portfolio will be hit through tax increases on share dividend income. This could even apply to pensioners who have gone down the route of supplementing their income through investing in the stock market.”
Owen was commenting on the Government’s announcement of a higher minimum wage and higher taxes for shareholders who receive more than £5,000 a year from dividends.
He said: “The budget is complex in relation to tax matters. The Government has also changed the rules for investors in the growing buy-to-let market, who are also faced with higher taxes.”
Under the new system everyone who receives dividend income will not pay tax on the first £5000. Basic rate taxpayers will pay 7.5 per cent on any additional dividend income, higher rate taxpayers will pay 32.5 per cent and additional rate taxpayers 38.1 per cent.
Buy-to-let landlords will be hit with higher taxes because generous tax relief, particularly against monthly interest repayments is being watered down.
Some tax experts have forecast that some small business owners who pay themselves through dividends might even sell up and pay a lower rate of capital gains tax and that buy-to-let landlords may increase rents to claw back loss of income through tax relief.
“As always there are several options open for discussion for those who are affected by the budget and large investors and small business owners would be well advised to examine these as soon as possible,” said Owen.
Anyone needing advice can contact Owen Kyffin on 01295 270200 or firstname.lastname@example.org