Income Tax (Trading and Other Income) Act 2005 section 403

Income charged

Section 403 establishes the basis on which dividends from non-UK resident companies are charged to income tax, and identifies the exceptions to the general rule.

• Tax is charged on the full amount of dividends arising in the tax year, using the "arising" basis rather than the "paid" basis that applies to UK company dividends
• Where cash dividends are retained within a Share Incentive Plan (SIP) and later paid over, sections 406(2) and (3) provide for a different timing of the charge
• When dividend shares cease to be subject to a SIP, section 407(3) provides a separate rule for the dividend payment
• Part 8 of the Act applies special rules where the dividends constitute foreign income