Dividends on higher rate tax

Mark_PHP · Postby **Mark_PHP** » Thu Apr 10, 2003 1:33 am

I own 70% of the business, and I am a higher rate tax payer i.e. 40%.

If I pay myself dividends do I pay tax on them of 40% even though they've already been subject to corporation tax?

Is there any relief?

womble · Postby **womble** » Thu Apr 10, 2003 8:51 am

Your dividends are treated as if basic rate tax has been paid, but as a higher rate tax payer I believe an additional 25% tax is payable - Phil

demetris · Postby **demetris** » Thu Apr 10, 2003 11:41 am

If dividends you pay yourself from the company fall within the basic rate of income tax, there is no addditional personal tax to pay. Dividends that fall within the higher income tax bracket are subject to 22.5% income tax.

You should be careful when you dividends to ensure that there are available permitted profits for the company to pay dividends to the shareholders. Otherwise the distribution will be unlawful and might be treated as additional remuneration by the Revenue.

I hope this helps.

Demetris Savva BA FCCA
http://www.tax-accounting-london.info
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