2016/2017 PAYE Code Changes
With the dividend tax coming into effect on the 6th April 2016, the average Director that pays a modest salary (within their personal allowance) and receives the majority of their remuneration through dividend payment will be paying more tax than in previous years.
Typically this tax would be payable by 31st January 2018 – the self-assessment tax payment deadline for the 2016/2017 tax year, but HMRC has now adjusted the tax codes of business owners and directors to allow the additional tax to be collected earlier than the usual deadline with the introduction of an additional deduction.
The deduction will be noted in the PAYE coding notice as ‘Dividend Tax’ stating ‘this is to collect the basic rate of tax due on your dividend income’ however the rate of tax paid on your dividend will be dictated by your income and if you are a basic, higher or additional rate tax payer.
If you are unsure of how the dividend tax will affect your tax liabilities, or want to ensure that PAYE code issued correctly calculates your liabilities there are a number of online tools available.
Our expert team are also on hand to provide any payroll guidance you may need, and to provide support managing all your tax matters with HMRC should you wish us to do so.
Why not book a meeting at our offices in Shrewsbury to help you understand the changes, and to look at the support Harvey Telford and Bates Accountants can offer you – 01743 462604 or email [email protected].
