Dividend clarification

[HappyUpNorth]

First post...

I have searched but not found an answer.

I run a Ltd Co. Net Dividends of £37k paid. With tax voucher, gross dividend was £41,111.

Sorry if this is obvious, but am I correct that the tax voucher - £4,111 - is paid to HMRC within the Corporation Tax due on the pre-dividend profit - i.e. no additional payment is required?

Thanks

[FarmerPalmer]

Company pays tax on profit, and can distribute profit as dividends, so when you get a dividend, its under the assumption that the company will pay tax on the profit, so you get a tax credit.

Once upon a time you had to pay Advanced Corpration Tax on paying out dividends, but now HMRC has opted for the lower red tape system we have today.

[FarmerPalmer]

If you go over the threshold then you personally may be liable to top-up the tax already paid to 40%, for tax on your income.

The tax credit is for basic rate only.

[HappyUpNorth]

Thank You

I understand. Limited Company has paid CT at appropriate rate. This is taken to include the 10% due on the dividends paid, myself receiving the net dividend.

I understand that I wil be liable for tax at the higher rate on the element of my income assessable for Income Tax over the higher rate limit.

Just got my tax return back from my accountant - my calculation check agrees to his figure within 18p.