SAIM5190 - Dividends and other company distributions: stock dividends: the tax charge: tax treated as paid: tax years up to 2015-16: example

Stock dividends: tax years up to 2015-16: example

Kylie opted to receive a stock dividend where the dividend statement showed a ‘cash equivalent of the share capital’ of £2700. The tax treated as paid was 2700 x 1/9 = 300.

If Kylie had been liable to income tax at the dividend ordinary rate, no additional tax liability would have arisen as the tax treated as paid would have been equal to the tax liability.

If Kylie had been liable to income tax at the dividend upper rate, the tax due would have been

£3000 @ 32.5%	975
Less notional tax	300
Tax due	675