HM Revenue & Customs: Tax on UK dividends

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Tax on savings and investments

In this section:

· Tax on bank and building society accounts
· Tax on UK dividends
· Tax on foreign savings and investment income
· Tax on buying shares
· Tax on the sale of shares
· Tax efficient savings and investments

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** Tax on UK dividends **

You pay tax at different rates on UK dividends (income from UK-resident
company shares, unit trusts and open ended investment companies) than you
do on interest from savings, such as bank and building society interest.

On this page:

· Dividend tax rates 2013-14
· How dividends are paid
· Understanding the dividend tax credit
· Paying tax on dividend income
· Can you claim the tax credit if you don't normally pay tax?
· More useful links

*Dividend tax rates 2013-14*

There are three different Income Tax rates on UK dividends. The rate you
pay depends on whether your overall taxable income (after allowances) falls
within or above the basic or higher rate Income Tax limits.

The basic rate Income Tax limit is £32,010 and the higher rate Income Tax
limit is £150,000 for the 2013-14 tax year.

-Dividend tax rates 2013-14-

Dividend income in relation to the basic rate or higher rate tax bands Tax
rate applied after deduction of Personal Allowance and any Blind Person's
Dividend income at or below the £32,010 basic rate tax limit 10%
Dividend income at


how are dividends taxed

Dividend Income: How Dividends are Taxed and Reporting Dividends on Your

Tax Return

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** Dividends **

*How Dividends are Taxed and Reported*

By William Perez, Guide

Dividends are a type of investment income generated from from stocks and
mutual funds containing stocks. Dividends represent a share of corporate
profits paid out to investors. Dividends are taxed when paid out.

-Tax Treatment of Dividends-

Dividends can be taxed either as ordinary income at ordinary income tax
rates or at the preferred long-term capital gains tax rate. Dividends are
classified either as ordinary dividends or as qualified dividends. All
dividends are ordinary dividends. Some dividends are qualified dividends
and qualify for the preferred tax rate of 0% or 15%.

To be a qualified dividend, the investor "must have held the stock for more
than 60 days during the 121-day period that begins 60 days before the
ex-dividend date." However, this holding period is longer in the case of
preferred stock: "you must have held the stock more than 90 days during the
181-day period that begins 90 days before the ex-dividend date if the
dividends are due to periods totaling more than 366 days." (Publication

The distinction between ordinary and qualified dividends is scheduled to
expire at the end of 2012. Absent further legislation, dividend income will
revert back to being treated as ordinary income subject to the ordinary
income tax rates.

-Reporting Dividend Income-

Dividends are reported to investors using Form 1099-DIV. This form is
issued by mutual fund companies, brokers, and corporations. Form 1099-DIV


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