SAIM5190 - Dividends and other company distributions: stock dividends: the tax charge: example

Stick dividends: example

Kylie opts to receive a stock dividend where the dividend statement shows a ‘cash equivalent of the share capital’ of £2700. The notional tax is 2700 x 1/9 = 300.

If Kylie is liable to income tax at the dividend ordinary rate, no additional tax liability will arise as the notional tax is equal to the tax liability.

If Kylie is liable to income tax at the dividend upper rate, the tax due will be