There was a very important change in the recent budget that affects small limited companies. The introduction of the dividend tax and dividend allowance. Up to now, business owners have been able to take out between £28-31k without incurring any personal tax (depending on the level of salary they have used). However, from April 2016 this will all change. From April 2016, the first £5k of dividends will be tax free, but you will then pay tax of 7.5% up to the basic rate allowance on anything above £5,000.

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