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please explain tax on shares to me

we have vodafone shares. instead of having a dividend the company automatically purchases more shares for us. when do we pay tax and what do we actually pay tax on, and when is that tax taken off, is the dividend like getting interest on our shares and the tax portion is taken off when new shares are purchased? have i just answered my own question:rotfl:

(At the moment i do not earn enough to pay tax, filling out the forms to reclaim earlier years refund, it seems there is a dividend tax of 10% which you can not reclaim back),
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Comments

  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Post of the Month
    edited 11 February 2016 at 7:53PM
    If you are not a taxpayer, you won't owe any tax. And no tax will have been taken; there's nothing to do.

    Going forward after April this year there is a new personal dividend allowance: everyone can receive dividends of £5k a year before needing to pay tax on it. Again, nothing will be paid when the divs are received, whether you keep them or reinvest them or auto-reinvest them.

    But if you are a taxpayer and you get more than £5k total dividends in the same tax year, (from Vodafone and anything else, and whether you keep them or reinvest or auto-reinvest them) then you'd owe tax on the bit above £5k.
  • jjgold
    jjgold Posts: 209 Forumite
    If you own shares in a company, you may get a dividend payment.
    Only higher or additional rate taxpayers pay tax on dividends. Check what tax rate you pay.
    If you don’t have tax to pay, you only need to tell HM Revenue and Customs (HMRC) about your dividends if you have to file a Self Assessment tax return.


    From HMRC website
  • Biggles
    Biggles Posts: 8,209 Forumite
    1,000 Posts Combo Breaker
    bowlhead99 wrote: »
    Going forward after April this year there is a new Persian dividend allowance
    'Persian', BH?
  • Malthusian
    Malthusian Posts: 11,055 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    The Siamese, Manx and Bengalis will have a personal dividend allowance as well (if they are UK taxpayers).
  • randm
    randm Posts: 496 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    when i filled out the form to reclaim tax and sent off my paperwork to show interest received and the vodafone paperwork for the year the tax office said that tax on dividends was 10 % and that i could not claim that back.
  • randm
    randm Posts: 496 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    the vodafone statment for the year if i remember rightly had a gross and dividend section but no net value, so i was having trouble working this out and thats how i came to be told about the 10% on dividends.
  • Biggles
    Biggles Posts: 8,209 Forumite
    1,000 Posts Combo Breaker
    Biggles wrote: »
    'Persian', BH?
    Malthusian wrote: »
    The Siamese, Manx and Bengalis will have a personal dividend allowance as well (if they are UK taxpayers).
    Ah! Of course, 'personal'!!! Damn spellcheckers. Christ, I was slow there....
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Post of the Month
    Biggles wrote: »
    Ah! Of course, 'personal'!!! Damn spellcheckers. Christ, I was slow there....

    That's what happens when one casually replies to MSE investor queries while travelling by tube and being more concerned with catching the WiFi signal in the 30-second station stops, than checking that your smartphone made the right guess at where you were swyping.

    I just tried it again, and it also likes Petrovsk, psychical and personnel depending how close you can be bothered to go all the way to the actual intended letters. :o
  • Eco_Miser
    Eco_Miser Posts: 4,933 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    randm wrote: »
    when i filled out the form to reclaim tax and sent off my paperwork to show interest received and the vodafone paperwork for the year the tax office said that tax on dividends was 10 % and that i could not claim that back.
    You can't claim it back because it was never paid in the first place. It's a legal fiction left over from a previous tax regime, and is abolished from April this year.
    The company declares a dividend, HMRC add one ninth as a tax credit, take 10% of the total, which is exactly the same figure, and call it quits for basic rate and non-taxpayers. Higher rate payers pay tax on the grossed up amount, but get the credit deducted from their bill.
    Eco Miser
    Saving money for well over half a century
  • C_Mababejive
    C_Mababejive Posts: 11,668 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Also if your total income exceeds the basic rate threshold then you could be up for paying a higher rate of tax on divis above 5k
    Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
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