How are individuals taxed on distributions received from UK resident companies prior to 6 April 2016? [Archived]
How are individuals taxed on distributions received from UK resident companies prior to 6 April 2016? [Archived]

The following Tax practice note provides comprehensive and up to date legal information covering:

  • How are individuals taxed on distributions received from UK resident companies prior to 6 April 2016? [Archived]
  • The charge to tax
  • Rates of tax
  • Tax credits for qualifying distributions paid by a UK company
  • Qualifying distribution
  • UK resident
  • Eligible non-UK resident
  • Exclusions from the tax credit
  • Tax credits on qualifying distributions—an example
  • Qualifying distributions received with no tax credit
  • More...

ARCHIVED: This Practice Note has been archived and is not maintained.

The way in which individuals are taxed on distributions was substantially changed in Finance Act 2016. This Practice Note explains the rules that apply to distributions made prior to 6 April 2016 by UK resident companies to UK resident and domiciled individuals.

For details of the tax treatment of distributions made prior to 6 April 2016 by non-UK resident companies, see Practice Note: How are individuals taxed on distributions received from non-UK resident companies prior to 6 April 2016? [Archived] and for information on the tax treatment of distributions made on or after 6 April 2016, see Practice Note: How are individuals taxed on distributions received from companies?

An individual who is subject to UK income tax receiving a distribution from a UK resident company will, subject to certain exclusions, be:

  1. subject to income tax on that distribution at the special dividend rates of tax: 10%, 32.5% and 37.5%, and

  2. entitled to:

    1. a tax credit equal to one ninth of the distribution received where the distribution is a qualifying distribution and the individual is UK resident or an eligible non resident

    2. be treated as having paid income tax of 10% on the amount of the distribution received grossed up by 10% where the distribution is a qualifying distribution and the individual is not entitled to

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