The budget and dividends

In his budget Mr Brown changed the rules relating to dividends from small companies.

From the 1 April 2004 as long as a company retains its profits then the first £10,000 of profit is effectively tax free as it is taxed at zero rate.

If part of or all of the profits are paid out as a dividend then the profits will be taxed at a rate of at least 19%. In the hands of the recipient the dividend is tax paid. In other words, unless you are paying tax at higher rates no further tax will be due.

Whilst this means that companies and dividend payments are not as effective as they were all is not lost. We can still consider forming a company for you but the tax advantages are not the only reason for doing so. As part of the review of your business, if you consider it appropriate we will look at the pros and cons of incorporation.

New employment regulations

The home office, as part of the campaign against the employment of illegal immigrants, has issued a booklet giving guidance to employers as to how they can avoid prosecution.

There are several different procedures that should be followed but the main courses of action are shown below. As from the 1 May 2004 if you are employing a new employee you should either see (and photocopy) their passport or an official document showing their national the insurance number together with proof of their address.

Please let us know it you have not received a booklet call us and we can send you a copy.

Tax return time will soon be with us!

Now that we have started a new tax year it is time to consider the preparation of accounts for your business. Bring your records in and we can let you know well in advance the amount of tax that will be due for payment.