Many of you will have received your 2017/18 tax code notices based on previous year’s income. I am sure many Director’s voted additional dividends in 2015/16 to take advantage of the old, more favourable, tax rate on dividend income. These rates have been used to calculate the tax code for 2017/18 and many of you will have received a lower than the usual 1150L tax code to reflect the new rates of tax on dividend income.
It may be that your dividend levels will not be dissimilar, in which case you may prefer to pay the tax due by PAYE monthly, rather than through Self-Assessment in January. However, there are cash flow advantages to leaving the liability until the January following the end of the tax year, rather than monthly throughout it. If you think that your tax code has been calculated incorrectly due to the new tax rules get in touch and we can liaise with HMRC to get this adjusted.