January 9, 2010 2:00 am
Many UK companies are drawing up plans to accelerate the payment of dividends in a move that would allow wealthy private shareholders to avoid the impact of the new top tax rate due to take effect from April.
Tax advisers said the decision earlier this week by Rathbone Brothers, the listed wealth manager, to pay a so-called second interim dividend in March rather than a final dividend in May was likely to prompt others to make a similar move.
Ted Baker, the fashion retailer, and Arbuthnot Banking Group are among those considering following Rathbones' example, the Financial Times has learnt. In both cases, directors own a substantial chunk of the equity.
Alistair Darling, the chancellor, unveiled plans last year for a new 50 per cent tax rate on earnings over £150,000 from April. As part of the changes, the tax on dividend income to earners in the top tax bracket will also rise, from 32.5 to 42.5 per cent.
Many private and public companies were due to pay a dividend after the cut-off date. By bringing forward the payment, shareholders could save substantial sums in tax.
Tim Linacre, chief executive of Panmure Gordon, the broker, said: "It's been discussed with a number of companies."
Tax experts said that smaller, private companies were more likely to make such a move than public counterparts with a high share of institutional investors.
Some companies may be unwilling to do so because of the disruption to cash flow, given that dividends must be paid from retained earnings.
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