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The following information is provided as a general guide. The information is for shareholders who acquire and hold Ordinary shares as an investment and are the absolute beneficial owners thereof. Except where specifically stated, the information applies to shareholders who are individuals and ordinarily resident and domiciled in the United Kingdom (UK). If you are not a resident of the UK and require tax information you should seek independent professional advice.
Yes, dividends from UK companies are treated as income for tax purposes but the notional tax credit of 10% is treated as meeting the basic rate liability and if you are not a higher rate taxpayer, you have no further tax to pay. Taxpayers who are subject to income tax at the higher rates of 40% or 50% will have further tax to pay, but will be able to offset the notional tax credit of 10% against their higher rate liability.
Both the cash dividend and the tax credit need to be included in total income when considering the threshold for higher rate tax. So when completing a tax return, you should show the dividend and tax credit amounts separately. You will find this information on the tax voucher we sent you.
The dividend will be subject to Irish tax. The tax liability will depend on your circumstances. The ‘notional' UK tax credit does not need to be included in your income, but you will not be able to reclaim this nor set it off against any Irish tax liability you have.
Standard Life does not deduct tax from dividends. The Company pay dividends from the profits it makes and has already paid tax on these profits. Therefore the dividend declared is the cash amount paid.
However, all UK dividends carry a tax credit equal to one-ninth of the dividend paid. This is purely a notional amount and Standard Life does not pay this tax to HMRC. Notional tax is a UK tax credit which is treated as meeting the basic rate tax liability, but which is not repayable under any circumstances. Taxpayers who are subject to income tax at the higher rates of 40% or 50% will have further tax to pay, but will be able to offset the notional tax credit of 10% against their higher rate liability.
As the tax credit is purely a notional amount, it is not possible to reclaim the tax credit if you are a non-tax payer.
Standard Life can only provide you with general information. We cannot give advice on specific questions or individual cases.
If you would like more specific advice you should contact a tax adviser or visit the HMRC website.
We are unable to give tax advice or comment on an individual's tax liabilities as this depends on your personal circumstances. There is a CGT annual exemption which for 2009/10 and 2010/11 will be £10,100. Gains above that will be taxed at 18%.
The cost of your shares for CGT purposes will vary depending on how you acquired them.
We reiterate that by giving you this information we are not offering tax advice and it is based on you being an individual shareholder, not a trustee, dealer, insurance company or having received your shares by virtue of an office or employment. If you are in any doubt as to your tax position you should seek independent advice.
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Looking for your tax voucher?
If you registered for ecommunications and received an email from us, your dividend tax voucher is ready to view online at the Standard Life share portal.
