What is dividend tax credit? (uk)?

Question

thanks!

Answer 1

When a Company pays a Dividend it has to pay (as I recall) 10% Tax.

You are paid the Dividend less that Tax. This Tax that has already been paid is the Dividend Tax Credit.

If you are a standard rate Taxpayer, there is no more to pay.

If you are a Higher Rate Taxpayer, then you have to pay an additional 22.5% Tax on Dividends (the Dividend Tax rate for higher rate payersis 32.5%, however you have the 10% Credit so only need to pay another 22.5%)

If you are a non-Tax payer (eg. Retired or a Pension Scheme), too bad, you can't get the Tax back.
Gorden Brown just shafted you again ... Inland Revenue picks up about £4 BILLION every year in Dividend tax that would otherwise have gone into our Pension Funds ....

Answer 2

Tax isn't paid on any variety of distribution in appreciate of shares (dividends, pastime etc). inspite of the undeniable fact that, there's a notional tax credit which potential you do not ought to pay any tax as long as you're a typical cost taxpayer. If a corporation broadcasts a dividend of 9pence consistent with share, you will get 9p for each share you very own. you will get a dividend certificates exhibiting the quantity paid - 9p - and a tax credit 1p. the completed is deemed to be 10p. once you fill in a tax return you may coach which you won 10p. The tax cost on dividends is 10%, so which you would be in probability of pay 1p. This 1p is roofed by way of the notional tax credit, so there is not any greater effective tax to pay. This tax credit is notional and can't be repaid.