Dividend information
Dividends may be paid by a company to its shareholders.
When the company announces a proposed dividend, it also announces the record date and the ex-dividend date associated with the dividend. The dividend is paid to shareholders whose names are on the share register at the close of business on the record date. The ex-dividend date is two business days before the record date. On that day the shares will be listed as ex-dividend; this means that a buyer will not receive the dividend payable on those shares.
A dividend is paid with a tax credit. Each shareholder receives a tax voucher which states the amount of the dividend and the amount of the tax credit. The tax credit is 1/9th of the dividend (corresponding to 10% of the dividend and the associated tax credit).
A UK resident individual shareholder is therefore treated as having paid tax at 10% on the aggregate of the dividend and the associated tax credit; as starting, lower and basic rate taxpayers are liable to tax on the dividend and associated tax credit at 10%, they will have no further liability to tax in respect of the dividend.
The tax liability on dividends for UK resident higher rate taxpayers is 32.5% on the aggregate of the dividend and the associated tax credit so that their liability for additional tax is equal to 22.5% on the aggregate of the dividend and the associated tax credit.
Generally, UK resident individuals can no longer claim a refund of the 10% tax credit.