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The Book-keepers Forum -> VAT, Payroll & Tax -> Corp Tax and dividends
Post Info TOPIC: Corp Tax and dividends
Jo Gordon


Veteran Member

Status: Offline
Posts: 63
Date: Tue Feb 21 17:36 2012
Corp Tax and dividends
 

Can anyone tell me very briefly, how CT and dividends work from a company's point of view?  I have no intentions of passing this on to clients, I'd just like to get it right in my own head.

I know that if a company pays a dividend, it deducts 10% and pays out the 90%.  What then happens to that 10%?  Is it paid to HMRC?

What then happens about CT? Presumably if CT is then calculated and paid, is there a double whammy, or is there some kind of off-set?

Thanks!

 



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Andy_L75


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Posts: 29
Date: Tue Feb 21 21:07 2012
 

Corporation tax is paid before dividends.

Dividends are then paid and put on the personal tax return.

For example if you receive a 10k dividend, this is class as 90% so the gross dividend on the tax return is £11111.11

You then get a 10% notional tax credit of on the £11111.11 which is the £1111.11.

Therefore its not paid over to hmrc. You only pay tax on the dividend if it pushes you into the higher tax bracket

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Jo Gordon


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Posts: 63
Date: Tue Feb 21 21:22 2012
 

Thanks Andy. Think I've got it now.



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