Income Tax (Trading and Other Income) Act 2005 section 413

Person liable

Section 413 identifies who is liable to pay tax on stock dividend income, depending on whether the recipient is an individual, a trustee, or a personal representative, and how joint ownership of shares is handled.

• Where an individual is beneficially entitled to stock dividend income (for example, as an outright owner, beneficiary of a bare trust, interest in possession trust, or nominee arrangement), that individual is personally liable for the tax.
• Where stock dividends are issued to trustees of an accumulation or discretionary trust, and a cash dividend in the same circumstances would have been subject to the special trust tax rates, the trustees are liable for the tax.
• Where stock dividend income arises to personal representatives during the administration of a deceased person's estate, no tax is charged under this chapter; instead, the income is treated as part of the aggregate income of the estate for the purposes of taxing estate beneficiaries.
• Where two or more persons are jointly entitled to the share capital giving rise to the stock dividend income, each person is treated as having received a proportionate part of that share capital, based on their interest at the earliest date the company was required to issue the shares.