Director Remuneration in 2020/21

Much has changed and how Directors remunerate themselves during 2020/21 tax year is no longer a simple question of tax efficiency.  

As you’re probably aware Dividend Tax rules have changed in recent years. Gone is the 10% tax credit to be replaced by a £5,000 tax free allowance and two new tax rates 7.5% for basic rate and 32.5% for the higher rate.

Basically, your dividend tax went up but the change also gave us the potential to save £1625 per year. Here’s how it can be done.

Many small business owners in the UK remunerate themselves using a blend of salary and dividends for the sizable tax savings available. The problem is most don’t complete the required paperwork to make the dividend legal and therefore leave themselves open to challenge from HMRC.