Tax On Share Dividends

Strike_Team

As far as I understand, share dividends are taxed at 10%, regardless of whether you're otherwise paying income tax, or what rate you pay it at. Am I correct in undestanding that, as a non-income taxpayer, I still pay the 10% tax on dividends and can't reclaim it?

Unbelievable_2

Fraid so

isasmurf

Er no. You don't pay any tax on dividends unless you're a higher rate taxpayer. The '10% tax credit' is a notional tax to reflect the fact that tax has already been paid by the company paying the dividend through corporation tax and to avoid any double taxation (i.e. taxing something that has already had taxed paid on it).

Therefore as it's not tax you've paid you cannot claim it back as a non-taxpayer.

Unbelievable_2

Yes - but you used to be able to claim the 10% back, not anymore!

Strike_Team

Thanks folks.