Rise in profits paid as dividends in 2015-16

UK corporate small and medium-sized enterprises (SMEs) paid out 94% of their profits as dividends last year. Moore Stephens said total dividend payments made by SMEs were £28.3bn in 2015-16 compared with £17.5bn in 2014-15 ahead of changes to the taxation of dividends. Partner Mike Cooper said: ‘SME owners reduced reinvestment into their businesses in 2015-16 compared with the previous year and the changes will continue to have an impact on future plans. From now on business owners will have to take out a higher percentage of profits in order to maintain the same post-tax income.

‘Entrepreneurs want to see future governments encouraging businesses to grow by reducing tax on dividends. If the tax on dividends cannot return to its original level entrepreneurs will at least call for it to remain unchanged to avoid any further damaging financial disruptions.’ He suggested that uncertainty over the...