Corporation Tax Act 2010 section 814C

Treatment of payer of manufactured dividend

Section 814C sets out the corporation tax treatment for a company that pays a manufactured dividend, including when a deduction may or may not be allowed and how the payment is categorised for different types of business.

• A company paying a manufactured dividend generally cannot claim a tax deduction for it, unless the dividend forms part of a trading profit calculation
• Where the manufactured dividend relates to investment business and the underlying real dividend is a taxable REIT distribution, the manufactured dividend is treated as a management expense of the investment business
• Where the manufactured dividend is referable to basic life assurance and general annuity business (BLAGAB) and the underlying real dividend is a taxable REIT distribution, it is treated as a deemed BLAGAB management expense
• A manufactured dividend received by the company and treated as a real dividend can itself give rise to relief when the company pays a further manufactured dividend, provided the relevant conditions are met