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We've scoured the web to get you the most up-to-date advice which includes the most useful tools on offer from the officials themselves.

Effective tax planning is essential if you are to minimise your tax bills. Simple tax planning can significantly reduce your tax liabilities.

The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have complicated income tax affairs.

Corporation tax is charged on a company's profits. If you trade as a limited company, ensure that paying this tax is as painless as possible.

National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rates apply.

As well as your legal obligations, you’ll want to ensure that payroll is painless and that you use any opportunities to improve your tax-efficiency.

VAT

Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.

Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Take professional advice.

Business property taxes apply to businesses with commercial premises.There are two commercial property taxes: business rates and stamp duty land tax.

If you have tax problems or face a tax investigation, it pays to seek professional advice and you must act rather than just hoping for the best.

HMRC Dividend Allowance factsheet

The HMRC dividend allowance means that you can receive a limited amount of dividends tax-free. Above that limit, special rates of tax apply. Dividends on any shares held in an ISA are also tax-free.

The tax treatment of dividends has changed several times in recent years, so it’s important to make sure you understand the current rules.

Dividend allowance

The dividend allowance for the tax years 2019/20 and 2018/19 is £2,000. This is a significant reduction from earlier years.

For up to £2,000 of dividend income, there is no tax to pay – regardless of how much other income you have.

For higher amounts of dividends, the rate of tax depends on your total income – including other, non-dividend income:

  • the first £2,000 of dividend income is still tax-free;
  • any extra dividend income within the basic rate band of up to £46,350 for someone with a personal allowance of £11,850 for 2018/29 (£50,000 with PA £12,500 for 2019/20), is taxed at 7.5%;
  • for dividends that fall within the higher rate band (up to £150,000), the rate is 32.5%;
  • for dividends in the additional rate band, the rate is 38.1%.

You can find examples of dividend tax calculation from HMRC. Note that HMRC’s examples are based on the tax allowances and rates for 2016/17.

Declaring dividend income

If you already complete a self assessment tax return, you include dividends in this. You declare the total dividends received, even if the amount is less than the dividend allowance.

If you do not normally complete a self assessment tax return:

You do not need to declare (or pay tax on) any dividends from ISAs.

Dividend allowances for previous years

The dividend allowance for 2017/18 was £5,000.

The dividend allowance for 2016/17 was also £5,000.

For 2015/16 and earlier years, there was no dividend allowance. But the rates of tax payable on dividend income were lower than the current rates:

  • for basic rate taxpayers, 0%;
  • for income in the higher rate band, 25%;
  • for income in the additional rate band, 30.56% (36.11% before April 2013).

Content reviewed by Mike Parkes, technical director, GoSimple Software

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