The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald

The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.

January is one of the busiest months of the year for accountants as we help many valued clients complete their self assessment paperwork.
Hopefully, if you’re reading this and you are included in the self-assessment programme, then the hard graft should now be all behind you.
But if you leave things to the last minute – and some people do – then the self-assessment deadline is here. It’s January 31!
Here’s some interesting statistics from the taxman at HMRC –

• a record breaking 24,546 people submitted their tax return online on New Year's Eve 
• more than 11,467 people sent off their self assessment tax return on New Year's Day 
• and in excess of 2,000 taxpayers submitted their tax returns on Christmas Day. 

Here at Clay Shaw Butler, we regularly remind our clients - The deadline for sending 2014/15 tax returns to HMRC, and paying any tax owed, is 31 January 2016.
Please contact Clay Shaw Butler if you need help with your self assessment return.
Meanwhile, further details have been provided of the new rates of income tax on dividends and the new Dividend Allowance which will apply to dividends received on or after 6 April 2016.
The rates of income tax on dividends will be:

• 7.5% for dividend income within the basic rate band (ordinary rate) 
• 32.5% for dividend income within the higher rate band (upper rate) 
• 38.1% for dividend income within the additional rate band (additional rate) 

There will also be a new Dividend Allowance of £5,000 where the tax rate will be 0% - the dividend nil rate. The Dividend Allowance applies to the first £5,000 of an individual's taxable dividend income and is in addition to the personal allowance.
Where an individual receives dividend income, from UK or non-UK resident companies, that would otherwise be chargeable at the dividend ordinary, upper or additional rate, and the income is less than or equal to £5,000, the dividend nil rate will apply to all of the dividend income. Where the dividend income is above £5,000, the lowest part of the dividend income will be chargeable at 0%, and anything received above £5,000 is taxed at the rate that would apply to that amount if the dividend nil rate did not exist.
In calculating the tax band into which any dividend income over the £5,000 allowance falls, savings and dividend income are treated as the highest part of an individual's income. Where an individual has both savings and dividend income, the dividend income is treated as the top slice.
The following example illustrates how the new Dividend Allowance and rates will work:
Patricia has a salary of £40,500 and dividend income of £7,000 in 2016/17. Her total income is therefore £47,500. The total of her personal allowance and basic rate band comes to £43,000. Therefore part of her dividend income would be taxed at the upper rate were it not for the operation of the new dividend nil rate.
So £5,000 will be taxed at 0% and £2,000 will be taxed at the upper rate of 32.5%
If you would like advice on how the new dividend rules will affect you please do get in touch.
Finally, The Department for Business, Innovation and Skills (BIS) is advising employers to begin preparing for the introduction of the National Living Wage (NLW) which comes into effect from 1 April 2016. The rate is £7.20 an hour and applies to employees aged 25 and over.
Businesses are being advised to prepare early for the changes on 1 April 2016, when the new wage will become law, and make sure they follow these four simple steps:

• know the correct rate of pay - £7.20 per hour for staff aged 25 and over 
• find out which staff are eligible for the new rate 
• update the company payroll in time for 1 April 2016 
• communicate the changes to staff as soon as possible. 

Business Minister Nick Boles said: ‘The Government's new National Living Wage will provide a direct boost to over two-and-a-half million workers in the UK – rewarding and providing security for working people.'
‘I am urging businesses to get ready now to pay the new £7.20 rate from 1 April 2016. With just under 4 months left, there are some easy steps employers can take to make sure they are ready.'
‘By taking these measures, companies will be able to properly reward their staff and avoid falling foul of the law when it takes effect.'

You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) -
http://www.clayshawbutler.com/news/latest-news-for-business
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
We stay ahead of the game by putting great store by continual professional development for our staff.
With Investors In People status at Clay Shaw Butler, we care passionately about making sure our staff have all the tools they need to serve you, our customers.

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