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Dividend Tax Credits

Volume 301: debated on Thursday 27 November 1997

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To ask the Chancellor of the Exchequer what assessment he has made of the impact on those shareholders who have no liability for income tax of his decision to end their eligibility for dividend tax credits from April 1999. [16622]

All relevant factors were considered when deciding whether shareholders should continue to receive payment of tax credits on their dividend income, including the position of those individual shareholders who are not liable to tax. Given that pension providers and most UK companies are no longer entitled to payment of tax credits on dividends paid on or after 2 July, it would not have been sensible to leave part of the incentive for companies to distribute profits through a payable tax credit to other investors. Nevertheless, tax credits will continue to be paid to non-liable individual shareholders until 1999, when they will have the opportunity to switch into Individual Savings Accounts, which will provide a tax-favoured environment for savings.