Safeguard yourself against possible dividend tax rate increases, CGT increases and VAT increases on 26th February 2020

With spending challenges and a shrinking tax base, many commentators are expecting a tough budget on the 26th February 2020. With individual tax rates already high, there are very few areas left to generate further revenue. The areas that may be targeted include Dividend’s Tax, CGT and possibly even VAT.

Although Dividend’s Tax is currently at 20%, if increased, the effective date would be 26th February 2020 (the date of the budget announcement) and not only effective from the following tax year. A potential increase could be to 22.5% with the justification being that this creates equity between distributed profit and individual marginal rates.

Should you have excess reserves and you are currently considering declaring dividends to your shareholders, please consider documenting these decisions before close of business on 25^th February 2020.

Similarly, if you are considering liquidating any of your personal or business investments, consider realising any gains now rather at the potentially lower CGT rate. This is also important should you have any older assets with a low base cost – it may be worth realising the profit in the assets now and buying them back at the higher base cost to minimise the future CGT on those assets.

And if you have any personal use assets that you are considering buying such as a motor vehicle, consider the impact of an increase in the VAT rate against your cashflow considerations.

We can assist you with the correct documentation to record these decisions, but we would need to be advised in writing by Friday 21st February 2020 latest to account for the necessary resolutions and disclosures.

Please contact us should you have any queries in this regard.

The above is all part of extremely complex legislation, which
is continuously evolving and subject to many rules.
We would strongly urge you to talk to Alexis, Dave, Juanita,
Fatima or Danie before you take any action.