Taxation of Dividend Income

Income from share dividends paid by UK companies and dividend distributions by unit trusts and OEICs is paid net of tax at 10. If you are a standard basic rate taxpayer you will have no further tax liability.

If you are a higher rate taxpayer however you face a further tax charge. Dividend income is "top-sliced" - this means you pay tax on dividend income at your highest rate. Therefore higher rate taxpayers must pay a further 22.5 to pay bringing the overall tax up to 32.5.

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2009-02-17 00:00:00 © Moneyextra.com