Income Tax (Trading and Other Income) Act 2005 section 385

Person liable

Section 385 identifies who is liable for income tax charged on distributions (such as dividends) from UK resident companies.

• The person liable is either the person to whom the distribution is made (or treated as made), or the person receiving or entitled to the distribution
• Special rules apply where distributions relate to open-ended investment companies, authorised unit trusts, or arrangements offering a choice of capital or income return
• Exceptions exist for cash dividends held within Share Incentive Plans (SIPs) that are later paid over, and for dividend shares that cease to be subject to a SIP
• Where tax legislation treats a distribution as the income of someone other than the original recipient, that other person becomes the person liable instead