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HMRC internal manual

Savings and Investment Manual

From
HM Revenue & Customs
Updated
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Dividends and other company distributions: stock dividends: the tax charge: example

Stock dividends: exampleKylie opts to receive a stock dividend where the dividend statement shows a ‘cash equivalent of the share capital’ of £2700. The notional tax is 2700 x 1/9 = 300.

If Kylie is liable to income tax at the dividend ordinary rate, no additional tax liability will arise as the notional tax is equal to the tax liability.

If Kylie is liable to income tax at the dividend upper rate, the tax due will be

£3000 @ 32.5% 975
   
Less notional tax 300
Tax due 675