Chargeable Event

Chrismaths

[STRIKE]Cheerfulcat[/STRIKE] Oopsy, ReportInvestor I mean! - no I don't think my post is misleading - I think anyone posting that dividends are 'tax-free' is misleading. The fact that there is no further tax to pay for a basic rate taxpayer (who isn't near age allowances/eligible for means tested benefits/near HR tax) may cover many people, but there is a large minority of people that aren't in that situation.

I never got an answer from Ed regarding how much tax someone who is £5,000 from HR tax pays when they receive a net dividend of £5000. For anyone interested, the £5000 net dividend is actually a gross dividend of £5555.55 - so now the investor is £555.55 over the higher rate threshold, and has to pay a further £125 in tax - not tax free then.

The fact that corporation tax is payable even if profits are not distributed is irrelevant - the tax is still paid on those profits that are distributed. The fact that the Government says you can no longer reclaim the tax paid by the company, doesn't mean the tax has gone away. National insurance is still a tax, and you can't reclaim that either.

Paul_Herring

Chrismaths wrote:

National insurance is still a tax, and you can't reclaim that either.

Opting out of SERPS/S2P is just such a rebate shirley?

Chrismaths

Not what I meant - If you earn £5000 in 3 months and don't earn for the rest of the tax year, then you will pay National insurance & income tax at the weekly/monthly rate. However, when you stop work, you can claim back all of the income tax you have paid, but you can't reclaim the NI. What you have described is paying a reduced rate of tax, not reclaiming overpaid tax (just as self-employed pay at 8% rather than 11%).

cheerfulcat

Chrismaths wrote:

Cheerfulcat - no I don't think my post is misleading - I think anyone posting that dividends are 'tax-free' is misleading. The fact that there is no further tax to pay for a basic rate taxpayer (who isn't near age allowances/eligible for means tested benefits/near HR tax) may cover many people, but there is a large minority of people that aren't in that situation.

Eh? Where did I say that a post of yours was misleading?Are you confusing me with ReportInvestor?

As to the taxation of dividends, I have attempted to correct Ed whenever the subject comes up.

Chrismaths

Sorry cc, you're right! Many apologies :embarasse

Clearly I know more about dividends than people, I'm not sure that this is a good thing.