Dividend allowance cut could ‘clobber’ SMES

CHANCELLOR Philip Hammond has been urged not to “clobber” businesses with a further £1.3bn tax grab in the autumn Budget.

The Federation of Small Businesses (FSB) is concerned the Treasury may slash the tax-free dividend allowance for directors and investors once again in order to help plug the funding gap for the NHS.

Mr Hammond first slashed the dividend allowance by 60pc from £5,000 to £2,000 a year in the 2017 Budget, which took effect from April this year.

Mike Cherry, the chairman of the FSB, said he was concerned that the Treasury would raid the allowance again in the Budget to bolster its finances. Removing the allowance completely would net the Treasury an extra £1.3bn by 2022, the FSB estimates, on top of the £2.6bn it forecast it would gain from the original cut.

That would take the total cost to businesses and investors to £3.9bn over the period, or nearly £3.5m a day, the trade body has highlighted.

“We need to back small businesses and their shareholders – not clobber them with a secret tax grab,” Mr Cherry said.

A spokesman for the Treasury said: “We keep all taxes under review.”

The spokesman declined to comment on whether fur- ther cuts to the dividend allowance were being considered.