Something cropped up this week that highlighted the fact that dividends can be taxed at 20% which some of us may have forgotten or even be unaware of…..so here’s a little reminder of what they are and where they go on the SA100.
What are they?
They are of course PID dividends. Short for Property Income Distribution
They will come from a Real Estate Investment Trust (REIT) which is required to distribute 90 per cent of tax-exempt profits from its property rental business as Property Income Distribution or "PID".
The voucher your client receives will look pretty much like any other dividend voucher but it will indicate that it is a PID and the deduction for tax will be at 20%.
Furthermore, although they are referred to as dividends they are in fact chargeable to tax as property income.
Where do they go?
Although they are considered to be property income the PID should not be shown on the Property Pages of the SA100. Investors in a UK-REIT do not, therefore, need to obtain and complete Property Pages if they have no income from property apart from the PID. Note that losses on other property business, such as buy-to-let, cannot be off-set against the PID.
The PID is entered in the main body of the SA100 on page 3. The income goes into Box 16 Other Taxable Income and the tax credit into box 18. This applies to PIDs paid by cash or paid by the issue of a stock dividend.
This is confirmed by the main return guide on page 10as per the link below: