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Introduction

A dividend is a distribution of profit by a company to its shareholders.

A dividend is not only a payment in cash. It can be the issue of new shares in exchange for forfeiting the right to a cash payment (a stock dividend). For more detail, see the Cash dividends and Non-cash dividends guidance notes.

For more on dividends from overseas resident companies, see the Foreign dividends guidance note.

Note that the Scottish and Welsh income tax rates and bands only apply to the non-savings non-dividend income (commonly referred to in practice as non-savings income) of Scottish and Welsh taxpayers. As far as the dividend income of Scottish or Welsh taxpayers is concerned, it is the UK tax bands and rates that apply. For the definition of a Scottish taxpayer and a Welsh taxpayer, see the Proforma income tax calculation guidance note.

When is a dividend taxable?

Whether a dividend is taxable in the UK depends on the circumstances of the individual and whether the dividend is paid by a UK resident company or an overseas