DIVIDENDS

System

In work, I have been asked 'how to deal with the Tax Credit element of a dividend payment' and to be totally honest, I haven't got a clue. Is there anyone out there who knows how I should deal with this.<BR><BR>Would be really grateful for any advice!!!

System

DIVIDENDS

when a dividend is received by a uk taxpayer it comes with a notional 10% tax credit. This means that a dividend of £80 is grossed up to £88.89 and this is added to taxable income. Unless total taxable income (after personal allowances) is in excess of £30500, the dividend will be taxed at 10% but, as you have already suffered a deduction of 10% at source you would be credited with that amount. Result, no tax to pay on div. If total taxable income is >£30500 the dividend excess is taxed at 32.5% but also gets a credit of 10%.<BR><BR>The net result is that for a standard rate tax payer there ius no tax on divs. For a higher rate payer the tax is 25% of the div. received.<BR><BR>A taxpayer who is not liable to tax cannot get a repayment on the tax notionally suffered on a div.<BR><BR>In a UK company's hands a uk div is not taxable, it should be shown net in the accounts and removed in the tax comp. Divs payable are shown net and are not tax deductible.<BR><BR>Is that enough? Email me at b.cooper@hychester.co.uk if you need more.

System

DIVIDENDS

Thats great, thanks for your help.