Is tax paid on dividends non-refundable?

mightymo_2

Earlier this year I received some dividends on shares I held. I entered these details on my tax return and expected to receive a refund of the tax paid. The Inland Revenue have today informed me that whilst the tax credit on dividends is treated as tax paid, it is non refundable.

The tax paid was only a few pounds, but as I am a non-tax payer I thought this would be refunded. Is this not the case?

katskorner

No you can't get tax back that has been paid on dividends. There was letter about this in Last Week's Financial Mail (Sunday). It doesn't seem fair but thems the rules! Flipping taxman.

isasmurf

It's not refundable because you don't pay any tax on dividends unless you're higher rate. The company paying the dividend pays the tax, but it shows up as if it's your tax on your statement.

EdInvestor

mightymo wrote:

Earlier this year I received some dividends on shares I held. I entered these details on my tax return and expected to receive a refund of the tax paid. The Inland Revenue have today informed me that whilst the tax credit on dividends is treated as tax paid, it is non refundable.

The tax paid was only a few pounds, but as I am a non-tax payer I thought this would be refunded. Is this not the case?

The tax paid on dividends is balanced by the tax credit, so in fact no tax is paid by those on basic rate or below and hence no refund: higher rate taxpayers have to fork out 25%.

Richie(UK)

isasmurf wrote:

...The company paying the dividend pays the tax, but it shows up as if it's your tax on your statement.

Strictly its a notional tax credit as nobody actually pays it over (company's used to pay ACT, Advance Corporation Tax, but this was abolished some years ago).

mightymo_2

Thanks for all the replies - it is slightly clearer to me now...

So... the return on the shares was 5.27% gross but I only received 4.75% net. It would seem then that there is no gross payout and only ever a net figure???

Mo x

Cook_County

The dividends will only have a notional credit if they are UK dividends paid to a UK resident. If this is what you have then the gross yield is never available to anyone.

lush_walrus

The rules on this form of taxation changed approximately 10-15 years ago. Tax on dividends was calculated differently prior to this time and was refundable.

As a child/teenager my parents claimed my tax back for dividends but while I was still below the tax bracket the rules changed.

As everyone has stated the taxation is now different.

Cook_County

The time frame is not 10 -15 years ago but only 6 April 1999 when Gordon Brown robbed money from all of our pension funds by cancelling the imputation system that the UK had in place from the early 1970s.

There is still a campaign alive to give the money back to pension funds even if not ISAs!

twhitehead

As treasurer of a charity I was able to claim tax back on dividends when people gave under Gift Aid. So if non taxpayers who gave to charity had tax credits the charity was able to claim that tax credit back. No more, rules changed this year and you cannot do that any more. We didn't lose very much but.........
:mad:

isasmurf

Cook_County wrote:

The time frame is not 10 -15 years ago but only 6 April 1999 when Gordon Brown robbed money from all of our pension funds by cancelling the imputation system that the UK had in place from the early 1970s.

This is a myth. Although pension funds have lost out on some money it is not as great as people think because of a number of other changes that were made when ACT was abolished.