Commentary

D5.110 Dividends (paragraph A)

Corporate tax
Corporate tax | Commentary

D5.110 Dividends (paragraph A)

Corporate tax | Commentary

Types of distributions

D5.110 Dividends (paragraph A)

There are several types of distributions as detailed in D5.102 and one type of distribution is any dividend paid by a company, including a capital dividend1. Therefore to establish whether a payment by a company is within this definition of distribution an understanding of the meaning of 'dividend' and 'paid' is required.

There is no definition of dividend in UK tax and so it must be given its ordinary meaning. In this respect, the form of the payment is important, for example if it has been declared by the company's board and noted as being in respect of the share capital2.

There are certain payments which may be referred to as dividends which are specifically excluded from being a distribution by the legislation, these are as follows:

  1.  

    •     building society dividends3 (see D7.822)

  2.  

    •     certain dividends from registered societies4 (see D7.626)

  3.  

    •     certain dividends from UK agricultural or fishing co-operatives5 (see D7.636)

  4.  

    •     certain stock dividends6 (see below)

Payment of dividends

A dividend is treated as paid on the day when it becomes due and payable subject to any other provision to the contrary7. The due and payable date will normally be established by a resolution of the directors or the members. However a dividend cannot be said to have become due until payment is enforceable, and if it is expressed to be payable

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