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| UK dividends and the higher rate (40%) taxpayer |
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If you do not pay tax or pay at the lower rate (10%) or reduced rate (22%) you will not have to pay any further tax on dividends from UK companies. If, however, you pay tax at 40% there is additional tax to pay of 25% of the dividend received.
Needless to say the actual calculation isn't straightforward but an example may help explain it. A. Shareholder receives a cheque for £900, which has been paid after a 10% (£100) tax deduction made by the company. The tax liability would be: Tax @ 32.5% on the "gross" dividend (£10,000) £3,250 Less tax "deducted at source" £1,000 Additional tax due £2,250
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