dividends

Discussion in 'Accounts & Finance' started by OGgy21, Feb 18, 2021.

  1. OGgy21

    OGgy21 UKBF Contributor Free Member

    49 0
    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?
     
    Posted: Feb 18, 2021 By: OGgy21 Member since: Jun 14, 2020
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    27,231 3,345
    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.
     
    Posted: Feb 18, 2021 By: Mr D Member since: Feb 12, 2017
    #2
  3. UK Contractor Accountant

    UK Contractor Accountant UKBF Legend Full Member - Verified Business

    5,231 941
    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.
     
    Posted: Feb 18, 2021 By: UK Contractor Accountant Member since: Sep 18, 2013
    #3
  4. Spur Support Services

    Spur Support Services UKBF Regular Free Member

    195 41
    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.
     
    Posted: Feb 20, 2021 By: Spur Support Services Member since: Aug 21, 2020
    #4