Budget 2007

Taxation of Dividends

• On the gross amount¹ at the rate of
  • 10% for starting and basic rate taxpayers (liability covered by tax credit)
    
  • 32½% for higher rate taxpayers ( equivalent to effective rate of 25% of dividend received)
  • 32½% for discretionary and accumulation and maintenance trusts - equivalent to effective rate of 25% of dividend received²
• Shareholders are not entitled to repayment of tax credits
• From 1 January 2007 certain distributions from real estate investment trusts are treated as UK property income rather than dividend income (unless recipient resident in a country with a tax treaty with the UK).

¹ Dividend received plus tax credit.
² Unless, for 2005/2006, income does not exceed the trust standard rate band of £1,000.

The figures shown here are subject to ammendment as the Finance Bill passes through Parliament.

This information has been prepared only as a topical guide to tax and personal financial matters. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material contained in this publication.