The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A dividend is a distribution of profit by a company to its shareholders.
A dividend is not only a payment in cash. It can be the issue of new shares in exchange for forfeiting the right to a cash payment (a stock dividend). For more detail, see the Non-cash dividends guidance note.
This guidance note deals with cash dividends from UK resident companies. For more on dividends from overseas resident companies, see the Foreign dividends guidance note.
The taxation of dividends is discussed in the Taxation of dividend income guidance note.
Cash dividends paid by UK companies on or after 6 April 2016 have no dividend tax credit attached, meaning the amount received is the amount which is taxable.
The company should issue the shareholder with a dividend voucher showing the number of shares held by the shareholder, the dividend paid and the date of payment.
The amount reported in box 4 of the main tax return is the total dividends received from UK resident companies in the tax year (ie the arising basis of assessment). Dividends are reported on box 5.3 of the short tax return, see the Short tax return guidance note.
The tax position of non-residents in receipt of UK cash dividends is not straightforward. See the Taxation of dividend income guidance note.
Cash dividends paid by UK companies before 6 April 2016 were deemed to have been paid net of a notional 10% tax credit.
Therefore, in order to calculate the gross amount, the net dividend needed to be ‘grossed up’. This was done by multiplying the dividend received by 100 divided by 90. For example, where a dividend of £18,000 was received, the gross dividend was £20,000 (£18,000 x 100/90).
The tax credit figure was calculated by multiplying the gross dividend by 10% or
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Time for paymentTwo statutory rules apply on death:•tax is ‘due’ six months after the end of the month of death and carries interest from the ‘due’ date until paidThere is a possibility of payment by instalments, but this applies to certain types of property only ― see the ‘Availability of
Expenditure of a capital nature is not allowed as a deduction when calculating trading profits. Expenditure of a revenue nature is allowable, provided there is no specific statutory rule prohibiting a deduction and the expenditure also satisfies the wholly and exclusively test. See the Wholly and
This guidance note provides an overview of the steps businesses need to take if aspects of their business change, and as a result, they need to notify HMRC about the change.Changes to name and / or addressIf a business changes its name and / or its address then it is required to notify HMRC of the
Why is this important?Tax-free amountEach individual, whether or not they are resident in the UK, is entitled to an annual exempt amount when calculating the taxable amount of their chargeable gains for the tax year (although see the exceptions below). The annual exempt amount is also known as the
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.