Changing the rules of retirementtax planning

The National Insurance increase due in the 2003-4 tax year further focuses the debate on whether remuneration for directors and high earners should be in the form of salary or dividend. Taking remuneration as dividend offers a number of advantages. It is usually more tax efficient, even for higher rate tax payers, where the company profits are taxed at 19% (profits between £50,000 and £300,000 a year). Tax benefits also arise from the fact neither the employer nor the individual pays National Insurance contributions on the dividend declared. A further advantage is that dividends may be re...