Dividend tax

[jwm1]

Would just like to check on the treatment of dividend tax.

Company has taxable profits as follows:

Y/E 30 Sept 2003 £60,000
Y/E 30 Sept 2004 £47,000

It then pays a dividend on 31 March 2005 of £10,000. Does an adjustment need to be made for the fact that the tax rate in y/e 30/9/04 was less than 19%?

[hashman]

No. Adjustment applies to taxable profits of y.e. 30/09/05 - need that figure to make calculation.

[jwm1]

So if taxable profits for y/e 30 Sept 2005 are c£90,000 there is no issue for dividend tax?

I thought the tax aplied from 1 April 2004 and hence would catch the last 6 months of the y/e 30 Sept 2004. Have I got that wrong?

[hashman]

If profits over £50,000 (single company) then NCD rate adjustment does not apply.

Correct - the scheme applies to distributions paid from 01/04/04 but it (possibly) affects the CT payable for the AP in which the dividend is paid.