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HMRC internal manual

Company Taxation Manual

ACT: FID: general: election: effect of

ICTA88/S246A (1), ICTA88/S246C, ICTA88/S246E

A dividend paid was treated as an FID once an election had been made and certain conditions had been met (see CTM21110). An FID could only be paid by a UK resident company. To make this plain, ICTA88/S246A (1) was amended in relation to dividends paid on or after 28 November 1995.

An FID did not carry a tax credit. An FID in the non-UK corporate recipient’s hands was treated like a stock dividend (see CTM21150).

An FID was not a distribution for the purposes of the definition of a franked payment in ICTA88/S238 (1). As a result:

  • FID were accounted for separately (see CTM21250).
  • Franked investment income could not be used to frank an FID paid.