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Salary or dividend: Where are we now?

Shared from Tax Insider: Salary or dividend: Where are we now?
By Lee Sharpe, November 2023

Lee Sharpe looks at the perennial question of how best to take reward from a family company. 

While readers will be familiar with the maxim that dividends tend to be more tax-efficient than salary, more recent developments in corporate and dividend taxation will, in some cases, mean that a bonus can feasibly be more tax-efficient overall.  


There are two key developments in owner-managed business (OMB) taxation to keep in mind: 

  1. Dividend ‘reform’ – In his summer 2015 Budget, the then-Chancellor set out a plan to put (or keep) the UK on a path to very low corporation tax rates (at least as low as 17%) as he was convinced that this would ultimately result in higher tax yields, as multi-nationals flocked to the UK to onshore their profits. But he decided he could not do this while there were such

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