SAIM5090 - Dividends and other company distributions: tax years up to 2015-16: tax credits: introduction

Tax credits: introduction

ITTOIA05/S397 to S401B deal with:

  • a person’s entitlement to a tax credit attaching to UK-resident company ‘qualifying distributions’ (SAIM5100);
  • a person’s entitlement to a tax credit attaching to foreign distributions (SAIM5102);
  • the tax treatment of qualifying distributions where the person is not entitled to a tax credit (SAIM5120);
  • the tax treatment of non-qualifying distributions (SAIM5130).

From 6 April 2016 tax credits are abolished by FA16/S5 and SCH1. The term ‘qualifying distribution’ is replaced by ‘non-CD distribution’, reflecting the fact that the former definition of ‘qualifying distribution’ at CTA10/S1136 is repealed and in those cases where the concept of the former qualifying distribution is still needed it can conveniently observe that it includes all distributions defined at CTA10/S1000 (1) except those at paragraphs C. and D. (i.e. bonus issues of redeemable share capital and of securities).

ITTOIA05/S397 to S398 (which include tax credits for distributions from non-UK resident companies and manufactured overseas dividends S397A to S397C) are repealed from 6 April 2016.

ITTOIA05/S399, formerly ‘Qualifying distributions received by persons not entitled to tax credits’ is amended and becomes ‘Tax treated as paid on distributions received by non-UK resident persons’. See SAIM5120.

ITTOIA05/S400 dealt with non-qualifying distributions and is repealed from 6 April 2016.

ITTOIA05/S401 which deals with a non-CD (formerly qualifying) distribution following a CD (formerly non-qualifying) distribution is retained but amended to reflect the new nomenclature.

ITTOIA05/S401A which dealt with recovery of overpaid tax credit is repealed, but S401B (which deals with power to obtain information) is retained, along with S401C (anti-avoidance - temporary non-residents).