SAIM5180 - Dividends and other company distributions: stock dividends: the tax charge: tax treated as paid

Income tax is treated as paid

ITTOIA05/S414 explains how a person's income tax liability is satisfied (in whole or in part). Under subsection (1), the taxpayer is treated as having paid income tax at the dividend ordinary rate on the amount charged to tax.

Subsection (2) provides that the tax treated as paid is not repayable. This applies even if the person liable is a non-taxpayer.

Subsections (3) to (5) ensure that individual taxpayers cannot be given credit for income tax on more than the amount charged to income tax. So, for example, if the individual's total income is reduced by deductions (for example, personal allowances) such that the stock dividend income is only partially brought into charge to tax, credit will only be given for so much of the stock dividend income as is so taxed.

Stock dividend income that would otherwise be chargeable at higher rate is taxable at the dividend upper rate ( SAIM1070).