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Commentary

27 Dividends

BUSINESSES vol 4(2) start-up, sale and purchase
| Commentary

27 Dividends

| Commentary

27 Dividends

Dividends paid are not deductible expenditure in calculating taxable profits for the purposes of corporation tax1. The recipient shareholder is generally entitled to a tax credit equal to one-ninth of the amount or value of the dividend2. Thus, a taxpayer receiving a £90 dividend will normally receive a £10 tax credit. For the purposes of computing tax on the dividend, however, the taxpayer is treated as receiving an amount equal to the dividend actually received plus the tax credit3. In the example above, this means that the taxpayer will be treated as receiving a dividend worth £100 (the

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