The government will abolish the Dividend Tax Credit from April 2016 and introduce a new Dividend Tax Allowance of £5,000 a year. The new rates of tax on dividend income above the allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
HMRC announced in February 2015 that registration had opened for the new married allowance tax break which enables couples to save the sum of up to £17.66 a month (£212 a year).
The new tax relief that came into effect on 6th April 2015, allows a spouse or civil partner who has annual income of less than £10,600 to transfer up to 10% of it (£1,060) to their partner as long as they are not a higher rate taxpayer. The claim is made on a form 575, which you can find on HMRC’s website or on a self-assessment return.
Relief for pre-trading expenditure does not extend to capital expenditure. However, similar rules allow capital expenditure qualifying for capital allowances to be treated as having been incurred on the first day on which trading begins.
However, first year allowances are given by reference to the date on which the expenditure was actually incurred.
Sally started trading on 1 September 2012. In preparation for trading she spends £10,000 on plant and machinery. The expenditure is treated as having been incurred on 1 September 2012 (the first day of trading). She claims the annual investment allowance, giving full relief for the expenditure against her profits of the first year.