Clients

Q. Do I have to pay tax on dividends and Capital Gains?

A. The following is designed to be a brief guide for those clients who are subject to UK taxation. Overseas taxpayers and UK taxpayers who are in any doubt as to their own tax position should consult a qualified tax adviser.

If you hold your investments in your own name or in a nominee account you may be liable to pay tax. Most dividends are paid with a tax credit that means that standard rate taxpayers do not need to pay any more tax. Higher rate taxpayers, however, will have extra income tax to pay. Please refer to our Current Tax Rates page. Capital Gains are also subject to tax at a rate equivalent to the taxpayer's marginal income tax rate. There is an annual exemption from Capital Gains Tax - please refer to our Current Tax Rates page. The amount of any Capital Gain that is subject to tax can no longer be reduced by indexation allowance and/or taper relief (these reliefs were abolished with effect from 6th April 2008).

If you hold your investments in a tax-privileged vehicle such as an ISA or SIPP then no higher-rate income tax is payable and Capital Gains are exempt from taxation. This makes the use of such vehicles attractive, especially for higher-rate tax payers.