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Hello
I am just working through a question from the BPP text book (pg33)
Moira was born in 1960. she receives net dividend of £54,000. She has no other income.
The answer says:-
Tax Liability £9230 (which i understand)but then it says:-
Less tax deducted at source £50560 x10% (£5056)
Tax payble £4174
The tax credit on dividend is restricted to that relating to taxable income?I deducted £6000 from the liability.
Please can someone explain – or tell me where in the open tuition notes it tells us about this – I have obviously missed something.
Kind regards
If you have an issue with the BPP material then do ask them about their content. In respect of the OT material we do not attempt to include every detailed technical point or the content would be 3 times as large and defeat the object of giving the student what they need to know to pass the exam. This is one of several very detailed points that has been left out partly for the very reason that you raise the issue – it causes more trouble than it’s worth!!
The answer is correct however that as the tax credit is a notional tax credit – no actual tax has been paid over – then the credit is restricted to that part of the dividend income that is taxable. Hope this helps
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