Declaring your dividends
Dividends are payments from shares, unit and investment trusts, which, investors hope, are not only regular (usually twice a year) but also rise over time to reflect the companys (or trusts) growing fortunes. Dividends are taxable as income.
The good news is tax on UK share dividends is deducted before you get it. If you are a basic rate taxpayer, you dont have to do anything else. Nontaxpayers and ten per cent taxpayers dont need to do anything either. But theres bad news here: You cant reclaim the deducted tax under any circumstances. Even though its called a tax credit by HMRC, we refer to it as a deduction to save confusion.
Top-rate taxpayers have to declare dividends on their self-assessment form and have the cash ready to pay the gap between the 40 per cent rate and the tax deducted.
Whether you get income from unit trusts, investment trusts, or individual shares, look at the date the dividend was declared and ignore the period for which the dividend applied. A 10p a share dividend for the year ending 31 December 2006 declared on 1 May 2007 and paid on 1 June 2007 counts as part of your 2007 ” 08 return, not the 2006″07 calculation.
If you invest for long-term growth in shares that pay low or no dividends, youll pay less income tax. But dont forget these shares tend to be riskier. And you can get hit for capital gains tax on your profits.
Dont forget if you are near the top of the basic rate ladder ” earning around $36,000 a year ” your dividends can push you into the top tax bracket. For instance, if you earn $36,500 and have $3,500 of dividends youll be over the $39,825 (in 2007″08) basic rate tax limit for a person aged under 65.
Dividends from stocks traded in foreign markets can be tough to deal with. You may have to convert dividend payments into sterling as well as account for them separately.
You need to fill out the foreign income pages of the self assessment form. The UK has double taxation agreements with most foreign countries. The effect of these agreements is to cap the tax due on foreign-sourced income so you are no worse off as a result of possibly being taxed twice.
Many stock market companies have schemes by which shareholders can opt to receive new shares to the value of their dividends rather a dividend cheque. Even if you choose this option, you still have to declare the value of the new shares and any balance carried forward in cash because it is not large enough to buy a share. Youre liable for tax on re-invested dividends in just the same way as a cash dividend.
Learn How to Invest Today from the basics to advance. Find financial freedom from debit and other money issues by learn how to invest and learning to control your money.
Technorati Tags:Personal Finance
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Ebay Deals on Personal Finance
Personal Finance
Jim Cramer's Real Money: Sane Investing in an Insane Wo
11 Feb 2010 at 4:43am
US $5.15End Date: Saturday Mar-13-2010 2:43:05 PST
Buy It Now for only: US $5.15
Buy it now | Add to watch list
4 LETTER RARE PORN DOMAIN NAME BYPM.COM PREMIUM WORD 3
13 Nov 2009 at 4:39am
US $4,000.00End Date: Saturday Mar-13-2010 2:44:34 PST
Buy It Now for only: US $4,000.00
Buy it now | Add to watch list
BUILDING, PREPARING & RACING MINI PERFORMANCE MANUAL
11 Feb 2010 at 4:47am
US $28.00End Date: Saturday Mar-13-2010 2:47:18 PST
Buy It Now for only: US $28.00
Buy it now | Add to watch list
Financial and Management Accounting Software Collection
8 Mar 2010 at 10:57am
US $0.91 (1 Bid)End Date: Saturday Mar-13-2010 2:57:13 PST
Bid now | Add to watch list
ACCOUNTING BOOKKEEPING TAX PERSONAL FINANCE SOFTWARE CD
8 Mar 2010 at 11:07am
US $0.91 (0 Bid)End Date: Saturday Mar-13-2010 3:07:19 PST
Bid now | Add to watch list
Youtube Videos for Personal Finance
Videos tagged with Personal Finance
Camilla Webster Anchor - Reporter
12 Mar 2010 at 8:59pm
Patzer Sees Financial Technology Innovation `Resurgence': Video
12 Mar 2010 at 2:13pm
2010 CADILLAC DTS LUXURY CERTIFIED WARRANTY!
12 Mar 2010 at 1:04pm
NBR | Tax Tip #1 for Tax Year 2009 - Making Work Pay | ...
12 Mar 2010 at 12:31pm
More Videos for Personal Finance
Search results for query: [Personal Finance]
Suze Orman - 4 Oct - Attitude On
14 Oct 2008 at 4:32am
Discuss the attitude for personal finance base on the "Can You Afford It?" sectionyoutube.com
The Three Principles of
2 Apr 2008 at 6:41pm
Mint.com is the first free, automatic and secure way to manage and save money online. CEO Aaron Patzer teaches you 3 free money management tips to ...video.google.com
(no title)
16 Sep 2008 at 5:06pm
Having financial management goals is important, because it allows the investor to make informed financial decisions that must be made in order to ...youtube.com
Suze Orman on
23 May 2008 at 4:26pm
Visit www.LowerMortgagePayment.blogspot.com for today's Mortgage News & Daily Rate Update. Suze Orman on index funds, ETFs and investing ...youtube.com
How to Create a
21 Jan 2008 at 5:01pm
Budgeting tips in thisfree series of personal finance video from our professional Certified Public Accountant (CPA). Expert: Tom Noah Bio: Tom ...youtube.com
Bestsellers on Personal Finance
| Could not open http://www.searchfeed.com/rd/feed/XMLFeed.jsp?trackID=B7643778475&cat=Personal+Finance&pID=41711&nl=2&page=1&ip=38.107.191.107 for parsing! |
Comments
No comments yet.
Leave a comment