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HMRC’s Latest Campaign: A Spotlight on Dividends 

HMRC is cracking down on company directors suspected of not declaring their taxable income from dividends. If you’re receiving dividends, it’s time to pay attention! HMRC is sending letters to company owners as a friendly nudge to declare any dividend income that might have slipped through the cracks.

What’s Being Investigated? 

It seems like HMRC has been playing detective, investigating company reserves and pin pointing businesses that have made a profit but show signs of depleted reserves – a classic tell-tale of dividend payments.

Options for Company Owners 

If you’ve received one of these letters, don’t panic! You have options:

  1. Disclose any undeclared dividends to stay on HMRC’s good side.
  2. Inform HMRC if you’re all clear and there’s nothing more to declare.

Remember, honesty is the best policy here!

Changes in Dividend Allowance 

Here’s something we all need to note – the dividend allowance is taking a hit! From April 2024, the tax-free allowance for dividends will drop to £500, affecting millions. This move aims to boost public finances but will require some adjusting from our end.

Deadlines and Penalties 

– 30 days to notify HMRC if there’s nothing to declare. Clock’s ticking!

– 90-day deadline after receiving your PRN to avoid a compliance check and potential penalties.

Penalties can be hefty, matching the tax owed plus interest for late payments, so let’s keep those declarations timely!

Making Disclosures & Payments 

HMRC offers an online disclosure facility for a smooth declaration process. Just remember to complete your registration first. Once you have your PRN, you can manage your payments online too – convenient, right?

Looking Ahead 

Despite the allowance cut, dividend income from ISAs remains tax-free – a silver lining!

The Treasury’s aim with these changes is to ensure public finances are on a stable path. While it will cost £700,000 to implement, the anticipated revenue increase is a significant upside for the public coffers.

Action Points for Us 

  1. Check if client is affected: Check with client if they have received any notice, take a closer look at your dividend income.
  2. Stay informed: Keep up with the changes and prepare for the reduced dividend allowance.
  3. Use HMRC’s resources: If you need to make a declaration, take advantage of the online tools provided.