Tax, stamp duty and levy for non-taxpayers

maas

Hi, what are the tax rules around purchasing/selling of shares and dividend income for non-taxpayers?

AM i right in thinking that I still pay Stamp Duty but dividend income is tax free or is dealing with shares the same regardless of tax status?

THis is for both ISA and non-ISA accounts

Credit-Crunched

maas wrote: »

Hi, what are the tax rules around purchasing/selling of shares and dividend income for non-taxpayers?

AM i right in thinking that I still pay Stamp Duty but dividend income is tax free or is dealing with shares the same regardless of tax status?

THis is for both ISA and non-ISA accounts

You will still pay stamp duty at 0.5%

Dividend income is no longer tax free, it is paid net of 10% tax credit that can not be reclaimed even by a non tax payer.

maas

Credit-Crunched wrote: »

You will still pay stamp duty at 0.5%

Dividend income is no longer tax free, it is paid net of 10% tax credit that can not be reclaimed even by a non tax payer.

Thanks for that.

If I have leftover cash in an shares/stock account and interest is paid to me on that cash, then the usual "20% HMRC levy on any interest paid" is the only tax which is waived?

alanq

Interest on uninvested cash in a Stocks & Shares ISA is paid with 20% tax deducted. I presume that this is reclaimable by non-taxpayers. However, it is not intended that large sums be left uninvested for long periods and interest rates being what they are the chances are it would not be worth reclaiming unless there was other tax on interest to reclaim at the same time.

noh

alanq wrote: »

Interest on uninvested cash in a Stocks & Shares ISA is paid with 20% tax deducted. I presume that this is reclaimable by non-taxpayers. However, it is not intended that large sums be left uninvested for long periods and interest rates being what they are the chances are it would not be worth reclaiming unless there was other tax on interest to reclaim at the same time.

The 20% deducted on interest earned on uninvested cash in a S+S ISA is not reclaimable.
It is not a tax but a "flat rate charge"
http://www.hmrc.gov.uk/isa/faqs.htm#25

maas

Very intersting, thank you noh.

alanq

As it is a "flat rate charge" does that mean that higher rate taxpayers owe no tax on the grossed up amount?

noh

alanq wrote: »

As it is a "flat rate charge" does that mean that higher rate taxpayers owe no tax on the grossed up amount?

That's correct.

alanq

Thanks noh.

My Barclays statement describes it as "HMRC deduction re. gross interest payment." A tax by any other name...

I'm glad to hear that I won't have to pay any additional tax / charge / deduction for my 32p of interest if I reach a higher rate tax band!