Has Interest just got Interesting?

Tax is changing, George Osborne seems to be getting busier the longer he is chancellor. In recent years there has been no need to pay interest on money directors/shareholders might lend their company because paying dividends was, for tax just as effective. So why further complicate your payments by having additional sources of income? What has changed?:

  • The first £1,000 of interest will be tax free.
  • Interest is not subject to dividend tax.

These two changes mean it will be tax effective to pay yourself interest on the money you lend your business. I won’t make you rich, but as they say, every little helps.