Here at Cheaper Accountant we are often asked about the dividend tax credit and what it is and what it means. So we decided to write a blog post to demystify the dividend tax credit.
All dividend payments receive a tax credit equal to 10%. This effectively equates to a 10% reduction in tax on dividends. This means that basic rate tax payers pay 0% income tax on dividend income.
The tax credit applies to any individual who receives dividend income from the shares they hold in a company.
It really is as simple as that. We won’t go into how to create a dividend voucher and how to calculate the dividend tax credit as that really is another topic in itself. We also believe that this is best left to your accountant. If you’re looking for Cheaper Accounting then check out our website and send us an email for a free quote.