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Small firms hit by end to dividends

Gordon Brown has closed the loophole that allowed ownermanagers of small businesses to avoid income tax by paying themselves dividends inst-ead of salary.

Many IFAs see this as a “punitive measure” from the Chancellor, with Master Adv-iser managing director Doug Brodie arguing that the move could see many firms return to sole trader status, with widespread job losses.

But IFAs believe the purpose of using a limited company will cease to be primarily about tax. Advisers think the change will remove the inc-entive for individuals to establish their own companies and see a shift towards self-emp-loyed status and partnerships.

The Jelf Group business development director Brian Lawless says the move is not good for small businesses and that it makes pension planning look like a more attractive opt-ion as there is no requirement to pay National Insurance.

Lawless believes that as the new rules affect small businesses with a turnover of up to £300,000, the changes will not have as deep an impact as was initially thought when the move was proposed by the Treasury in February.

Brodie says: “By virtue of removing the ability of drawing income via dividends, the Chancellor is selecting against small companies. This is a crass piece of interference from the Treasury that is probably unworkable. The cost of trying to police this will be huge.”

Lawless says: “This is by no means a friendly gesture tow-ards small businesses who will need to take a good look at how they pay themselves.”


MGM shaves 3 per cent off bonuses

MGM Assurance has cut maturity payouts on its 25-year with-profits endowment policies by 3 per cent. The mutual says it increased the proportion of equities in its conventional with-profits fund to 41 per cent from 30 per cent through 2003, and achieved a 10.1 per cent return on assets across the fund. MGM chief operating […]

A budget of missed opportunities – Bitner

David Bitner, head of product operations for The MarketPlace at Bradford & Bingley, believes the Chancellor should have addressed the falling levels of first time buyers in his Budget, given he is concerned enough about supply and demand in the housing market to have commissioned the Barker Review. He says the Chancellor should have updated […]

Medical blunder

Further to the letter in connection with Norwich Union&#39s failure to provide cover for an IFA, I thought you would be interested to see that it is not only IFAs that it fails (Money Marketing, March 4). A client of mine has a joint-life, second-death policy for £500,000 with Norwich Union and completed the appropriate […]

Out of context

•”The dentist is almost as expensive as my PI bill now but at least the dentist is pain-free.” – Informed Choice managing director Nick Bamford updates MM on his root canal work •”I can guarantee you selection in the most left-wing constituency in the UK.” – Labour MP John McFall to the Adam Smith Institute&#39s […]

Healthcare regulation amalgamation predicted for Gulf states

While Dubai is leading the way in terms of legislating for expat healthcare in the Gulf, Qatar, Abu Dhabi and others are watching and learning – that’s according to Jelf International’s director of international services, Doug Rice. He believes the pace of change in the Gulf states will continue and that some level of unified healthcare system will be introduced across the region.


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