Small businesses are collateral damage in social care tax hike | Nils Pratley

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Nils Pratley

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The 1.25-point rise in tax on dividend income will hit sole traders and the self-employed

The lower-profile element in the government’s tax hike to raise cash for health and social care was the 1.25% percentage point increase in tax on dividend income. It didn’t generate the same attention as the core revenue-raising “social care levy” on national insurance contributions because, first, the sums are smaller, and, second, because wealthy individuals enjoying dividend income from vast share portfolios are viewed as fair game.

But therein lies the political cynicism in the measure. While some fortunate folk do indeed fit the dividend-happy caricature, not many will be touched by this measure. Those at the top of the bracket long ago moved their holdings offshore. And the comfortable class of private investor knows the first rule of the game: utilise your annual tax-free Isa allowance (currently £20,000).

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