Shareholders Beat UK's 50% Tax

by Jason Gorringe, Tax-News.com, London

28 April 2010

New research from Capita Registrars suggests that several UK businesses brought forward dividend payments to avoid the 50% top income tax rate, which was introduced on April 6.

According to the research, British companies paid out more than GBP840m in dividend payments before the end of the last tax year. Although a small proportion of these businesses made no change to the date in which the dividends were paid, Capita Registrars noted that several companies had brought forward the date of payment to before April 6, to reduce the tax burden on shareholders.

Commenting on the findings, Paul Taylor, head of dividends at Capita Registrars, stated:

“Fast-tracking the dividends is not only legal, but would show how directors are discharging their duty to maximise returns to shareholders, if indeed, beating the tax rate was the prime motivation.”

"Smaller companies are more likely to have owner-managers who have greater flexibility over how they provide returns to themselves and other shareholders, and therefore potentially greater motivation to beat the tax rate."

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