Article Summary
This guidance note provides an overview of cash dividends paid by UK companies to shareholders. It explains that dividends paid on or after 6 April 2016 no longer have a dividend tax credit attached, so the amount received is taxable in full. The note covers how dividends were taxed before April 2016, when a notional 10% tax credit was attached. It explains the need to 'gross up' dividends to calculate this tax credit.It advises that dividends should be reported on the tax return on an arising basis. The note covers how joint shareholdings are taxed, either on a 50:50 split or based on beneficial entitlement. An anti-avoidance rule taxes dividends on parents where funds were provided for a minor child to acquire the shares. The note mentions exemptions like ISAs and VCTs and highlights using dividends for income tax planning. Overall it provides useful background on UK dividend taxation that a tax professional would need to be aware of.