Last year we wrote about the new dividend tax which will be introduced in April 2016. Read the article here
For business owners, this new rate increases the tax on dividends over the sum of £5000. This new legislation by George Osborne has received criticism from business owners and investors. Not least because income from dividends is already taxed through Corporation Tax. The government has pledged to lower the rate of Corporation Tax from 20% to 18% by 2020. Yet, for small business owners who pay little in Corporation Tax, does this make much of a difference?
We caught up with Serena Humphrey, founder of The Survive and Succeed campaign for SME’s. This campaign aims to increase the long term survival rates of small businesses. Serena explains that “with only 40% of SMES surviving past 5 years” there needs to be more support.
Serena says the tax will “hurt SME’s” and has a petition against the new dividend tax. At the time of writing, this petition has 46,264 current signatures. Yet, with only 4 weeks to go, there is real urgency to reach the 100,000 needed for it to be debated in parliament. A tireless campaign is now underway to bring this to the attention of small business owners.
Serena explains that “so many business owners still know nothing at all about the tax”. Yet, when she explains to business owners “they feel angry about it and the damage it’s going to do the SME economy”. The lack of awareness means that once the date has passed SME’s are “going to be stuck with an extra tax”. This tax has the potential to cost SME’s “thousands of pounds a year” which many cannot afford.
Uncertainty within the UK means that SME’s are the most likely to feel any repercussions. To go with this uncertainty, taking an extra 2bn out of the SME economy can only do more bad than good. A quick overview of the UK economy, looks far from rosey for SMEs. Serena touches on “interest rates hikes, wage increases, auto enrollment and dividend taxes”. The rising costs all have the potential to be catestrophic for many small businesses. You have got to then question, whether this tax is a fair one or whether is it shortsighted.
It is important to look at the other side. The fact is that the government are looking to raise more money by taxing dividends. If they did scrap this tax, how then would the government recoup that extra money and who would pay it? Serena’s message on this is clear. “How about we actually support small business. Give them the conditions to survive and succeed in the long term. That way we’d create far more jobs and pay far more corporation tax”. Her view is not unrealistic neither is it unachievable. Long term sustainability is the key to supporting the SME market.
With all that said, Serena is adamant that this tax will do nothing but hurt small businesses. Her aim is simple. “We have around 5.5m small businesses in the UK and we need to reach them to let them know that they have a chance to stop this tax”.
Interested in signing the petition and getting behind the campaign? You can find it here:
To follow Serena’s social campaign you can follow the link below: