Tax on dividends

mattsaze

I have inherited shares and some dividends were paid during the administration period. These were taxed before being paid out. 

Does anyone know if you have to declare this income for capital gains tax or is it exempt as tax has already been paid? 

Keep_pedalling

Dividends are not subject to CGT. Any tax due on the dividends would have fallen on the estate not you.

mattsaze

Sorry I meant CGT for income on the estate during admin period

Keep_pedalling

mattsaze said:

Sorry I meant CGT for income on the estate during admin period

CGT applies to the increase in value of an asset between the date of death and the sale of that asset, so if the value of share rose in that period then CGT might apply, dividends are income and are subject to dividend tax not CGT. 

Notepad_Phil

The estate should have paid the dividend tax on these dividends, but take a look at https://www.litrg.org.uk/tax-guides/bereavement/how-does-personal-representative-deal-income-and-capital-gains-arising-after#toc-what-happens-when-income-from-the-estate-is-paid-to-beneficiaries- to see what further tax or rebate may be due to you.

pjs493

Dividends are subject to tax at the basic rate of 8.5%. If the tax has already been paid to HMRC then it won't need to be reported when the executor writes to HMRC or completes a tax return once the administration period has ended. There is no tax free allowance on dividends or income tax for an estate, the entire income is taxable.

https://www.gov.uk/probate-estate/managing-and-selling-assets