dividends

[OGgy21]

Hi all,

just wondering how taxation on dividends works with corporate shareholders.

Say A and B (people) are shareholders in X limited. X limited is the sole shareholder in Y limited.

If Y limited declares dividends and X limited therefore pays (corporation) tax, would A and B (as shareholders in X limited) pay dividend tax on the same if they chose to withdraw the dividends i the next financial year or is there some sort of relief available?

 

[Mr D]

Ok director of y does dividends. And director of X then decided to do dividends from the profits of X?
So then getting into personal taxation and tax allowance. Has not happened previously with that money, it has never belonged to any individual.

 

[UK Contractor Accountant]

Dividends received by a company from UK Corporate group shareholdings are not subject to Corporation Tax.

You will only pay personal tax on dividends from X Ltd.

 

[Spur Support Services]

As UK Contractor says....
Plus dividend income to the individual is taxed at a variety of rates primariliy dependent on the tax band it falls under.
The first £2k is received by the individual with 0% tax
Then its 7.5%, 32.5%, 38.1% dependent on whether the income falls into the basic, upper or additional tax bands.

Consideration should be given to the total tax rate when considering dividends, as the trading company has already paid corporation tax at 19% on this income.