Company paying dividends to another company

stevo5678 Well-KnownCheltenham Registered Posts: 325
Hi everyone, I have a question. If a company (who happens to be in the Isle of wight) owns shares in another company (a UK incorporated) does the UK co need to deduct actual tax on its payments of dividends or does the nominal 10% tax credit still come into play?



  • deanshepherd
    deanshepherd Font Of All Knowledge Registered Posts: 1,809
    No tax to deduct, no credit either really as dividend income not taxable in receiving company - woohoo!

    (There is a bit of faff with the marginal rate relief calculation though..)
  • stevo5678
    stevo5678 Well-Known Cheltenham Registered Posts: 325
    Thanks Dean, this is what I suspected but am not experienced in this. Thanks for your help!

    I understand the rules were different Pre April 1999 from my reasearch on HMRC.

    Incidentally, do you have a go to place when looking up this king of information (assuming there are somethings you don't know!)?

  • deanshepherd
    deanshepherd Font Of All Knowledge Registered Posts: 1,809
    Pre 1999 was messy. There used to be actual tax on dividends back then and I am sure there are still companies with unrelieved 'Advance Corporation Tax' pool balances perpetually carrying forward. I don't look back fondly to those days!

    When I post on here I generally only do so if I at least 'think' I know the answer or have a link bookmarked (particularly from HMRCs website).

    For client stuff I will use a combination of the technical advice line provided to me by my fee protection insurer, the CCH online resource provided to AAT MIPs (don't use that very often to be honest) and good old-fashioned Tolleys tax guides - particularly good for complex VAT situations and tax cases to quote at stubborn inspectors.
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