Tax back on share dividends?

rhubarbs

Hi,

I am a full-time housewife at the moment so have no personal earnings. I have a few shares and have realised that I am paying tax on the dividends. Can I claim this back? How? I was earning until September 2005, basic maternity pay until jan 2006 then nothing since except child benefit. I now have dividend receipts from 2005, 2006 and 2007.

Thank you.

dunstonh

You cannot claim tax back on dividends if you are a non taxpayer.

ShoesAreDamnExpensive

you can't reclaim tax paid on dividends regardless fo whether you are a taxpayer or not.

For quite a few years now the 'tax' you see on the dividend voucher is not actually a tax that has been paid it is a tax 'credit'. As it is not actually a tax that has been paid by anyone it is not reclaimable. The credit is there simply to ensure that basic and non taxpayers do not have any further liability on a dividend. that's the very basic explaination.

Tax on other investment income such as bank or building society interest IS reclaimable :j and you can obtain a repayment claim from your local tax office.

dunstonh

Tax on other investment income such as bank or building society interest IS reclaimable

investment income? Surely that would depend on the tax wrapper used for the investment and the underlying assets.

longforgotten

I agree with ShoesAre DamnExpensive, we cannot claim back the tax on dividends. It would be very handy for my Mum if she could, she could do with the pennies but Inland Revenue say no. Say thank you to Gordon Brown as he is the man who did the dastardly deed. Did the same trick with peoples pension pots ! Can get the tax back if they're in an ISA

It is literally tax on bank and building society interest that people have a chance of getting the tax back on

dunstonh

Can get the tax back if they're in an ISA

Nope. The tax credit change affected all tax wrappers.

It is literally tax on bank and building society interest that people have a chance of getting the tax back on

Fixed interest funds (such as gilts and corporate bonds) can still claim the tax back for non taxpayers and within pensions and isas for everyone else.

RayWolfe

longforgotten wrote: »

Say thank you to Gordon Brown as he is the man who did the dastardly deed. Did the same trick with peoples pension pots !

As your username indicates, you have forgotten
1 who started the change to dividend tax
2 that companies used to pay the tax via Advance Corporation Tax
3 the Corporation Tax reduction that accompanied the change
4 the reason for making the change which was to try to change British companies propensity of not reinvesting profits.
Just so easy to remember only the bad and to have Longforgotten the good.

longforgotten

Thanks RayWolfe but whoever changed the rules I think it was a 'dastardly deed'. Many ordinary people on low incomes have shares these days so I think its a shame that they re not able to claim the tax back if they can

I apologise profusely to Gordon Brown if I blamed him in error!

alan99_2

Hi

Could someone remind me/us how the tax on company profits/dividends works.

1) say a company makes £1,000,000 profit after expenses. They then pay 40% corporation tax :question: Leaving £600,000 to pay to shareholders:question:Is this correct ? . If all the 60k is paid out to small shareholders what would be the situation with 22% and 40% tax payers receiving dividends. Will they have to pay any more tax or get a refund if only a 22% pax payer.

2) likewise with a small family co. On a profit of £10,000 . What will that leave for dividends 8K :question: How will that affect a basic tax payer receiving a dividend.

Thanks.

Alan

Bean_Counter

alan99 wrote: »

Hi

Could someone remind me/us how the tax on company profits/dividends works.

1) say a company makes £1,000,000 profit after expenses. They then pay 40% corporation tax :question: Leaving £600,000 to pay to shareholders:question:Is this correct ? . If all the 60k is paid out to small shareholders what would be the situation with 22% and 40% tax payers receiving dividends. Will they have to pay any more tax or get a refund if only a 22% pax payer.

2) likewise with a small family co. On a profit of £10,000 . What will that leave for dividends 8K :question: How will that affect a basic tax payer receiving a dividend.

Thanks.

Alan

Hi Alan,

On item 1, then I'm afraid life is not that straight forward. There are many adjustment to go from accounting profit to taxable profit for corporation tax, such as adding back depreciation, entertaining etc, allowing capital allowances etc. Depending on the circumstances of the company, there could be many more adjustments. This is a job for an accountant to make sure that it is right.

Corporation tax for 2006 / 07 is calculated at a rate of between 19% and 30%. Again this depends on other factors such as losses brought forward, number of associated companies etc etc.

The payment of dividends to shareholders depends (again amongst other things) making sure that there are sufficient distributable reserves.

The rate that the recipient of the dividends are taxed at depends on their individual tax rates. So any advice would depend on the marginal rate of tax of that person.