Do companies automatically deduct tax from your dividends?
Question by Steve C: Do companies automatically deduct tax from your dividends?
If you hold, say, shares in BP and they pay you a dividend of £500, do they automatically pay the tax on that for you?
And are the “tax credits” they give you with the dividend equal to this – what can one write these tax credits off against?
Best answer:
Answer by William C
You need to request the payer of the dividend to deduct any percentage you want to cover potential taxes. Or, you can have none deducted and pay at the end of the year.
What do you think? Answer below!
They will have asked you at some point whether you are a tax payer or not and will deduct accordingley, if you can’t remember check with them.
Yes, the tax credit is a deduction for tax purposes and you can use it against your total tax liability for the year. However, it is not repayable, so if it’s the only tax you suffered in the year, you’ve lost it!