Estate agency business owners could face dividend shock

Treasury plans to slash dividend tax could wreak havoc with small business growth plans as the government looks to bolster its coffers.

Dividends

Rumoured Treasury plans to hike dividend tax could wreak havoc with some small estate agency business growth plans as the government looks to bolster its coffers while inflation continues to bite and recession looms.

Chancellor Jeremy Hunt is thought to be looking at increasing taxes on people that own shares as well as ramping up Capital Gains Tax, Treasury sources have briefed both the Financial Times and The Telegraph.

Under the leaked proposals it is thought that Hunt is looking closely at raising the dividend tax rate as well as cutting the tax-free allowance for dividends.

GROWTH

No decision has been taken but it’s common practice for small business owners to pay themselves through dividends – it being more tax efficient and encouraging growth.

According to sources, under one option being considered dividend taxation would rise by 1.25%.

The current tax-free dividend is £2,000 but plans are also being considered to half that to just £1,000.

HARDER

While those proposals could raise nearly £500 million for the Treasury it would make it a lot harder for small business owners to both make a profit and reinvest.

The Financial Times reports that the Federation of Small Businesses has calculated that an owner manager whose business makes £40,000 profit which they take as dividends would pay more than £2,000 in tax than someone that they employ on a £40,000 salary.

We’re already heading for a recession and now they want to bowl us googlies and squeeze us even harder.”

One small estate agency owner based in East London, who asked to remain anonymous, told The Neg: “This is just getting ridiculous now. Small business is meant to be the lifeblood of the economy but where do they think this is all going to go?

“We’re already heading for a recession and now they want to bowl us googlies and squeeze us even harder. When’s it going to stop?”


One Comment

  1. In tough times, failing governments usually decide not to proceed with tough & unpopular tax (and other) law changes. Why? It forces the newly elected party to implement them to ‘right the ship’, often resulting in a swing back the following election. The Conservatives appear determined to not only lose the next election by a record amount but ensure they don’t get back in power for a while. They’re not only doing a bad job for the country but can’t even appear to deliver ‘self-interested’ policy making. Blimey.

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