Dividend payment

paulr

A Ltd Company is making a 5k dividend Gross payment to a self assssment shareholder;
is the income tax to be forwarded to Hmrc 9/10 of Gross; and which tax office receives
the tax due.

Anne Boleyn

Dividends

Hi Paul

If the shareholder is a basic rate tax payer there won't be any tax to pay. A dividend carries a notional 10% tax credit but it isn't paid. If however the shareholder is a higher rate tax payer then there is additional tax to pay but as he is already in self assessment it will be declared on the tax return and the tax worked out in conjunction with all their other sources of income.

Hope this helps.

Monsoon

The company pays £5k.

The shareholder receives £5k.

The £5k is net of the 10% tax credit but it is notional and is never paid over to HMRC and is never repaid to the shareholder.

If the shareholder is a basic rate tax payer there is no further tax to pay.

Dividends can only be paid out of post-corporation tax profits.