Limiting dividends in expectation of drop in 50% tax rate
I have a scenario where a client has a one-man band company with minimum salary + dividends setup.
Client is keen to cap the dividend payments such that taxable income falls below £100k so that the personal allowance abatement doesn't kick in.
This means that the distributable reserves are building up in the company.
Client thinks that if the 50% (or 42.5% in the case of dividends) will eventually (soon?) be abolished, allowing free flow of dividends and champagne.
Has anyone else using similar logic, or is there anything I have missed?
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