City of London faces fresh threat from £600m dividend raid –

But Kitty Ussher, a former Labour City minister who is now chief economist at the Institute of Directors, accused ministers of targeting smaller company bosses who rely on dividend income.

She said: “This government has shown through its actions a total lack of understanding of the very real difficulties faced by owners of the smallest businesses in Britain.” 

The dividend tax rise increases the pressure on companies already facing a national insurance increase from next April, which is aimed at raising £11.4bn.

Mike Cherry, chairman of the Federation of Small Businesses, said that chief executives who fought to avoid laying off staff at the height of lockdown are now being punished for this loyalty.

He said: “These hikes will have business owners and sole traders feeling demoralised at the point when they’re trying to recover from the most difficult 18 months of their professional lives.

“For those thinking about starting up, they send completely the wrong message. This move marks an anti-jobs, anti-small business, anti-start up manifesto breach.”

Taxpayer support for workers’ wages is due to be wound up by the end of the month, meaning companies are already facing a significant financial hit.

Stephen Phipson, chief executive of Make UK, said: “Putting a tax on jobs and workers at a time when the Government is pulling the furlough scheme is ill-timed as well as illogical.”

Owner-managed businesses also voiced their disapproval. Kate Allen, owner of holiday home business Salcombe Finest, said: “As a small business owner in the hospitality industry, single mother and with my parents soon to become octogenarians, it feels like yet another grab for the income I am clawing to keep hold of. 

“Whilst I can’t deny Boris’ cause, I question the Government’s ability to actually deliver on this project without wasting our hard-earned cash.”

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