Skip to main content

Dividend Tax Credit

Volume 453: debated on Thursday 23 November 2006

To ask the Chancellor of the Exchequer what assessment he has made of the effect of the abolition of the dividend tax credit on the number of private pension wind-ups. (100570)

No such assessment is possible.

The withdrawal of payable tax credits on dividends was part of a wider package of measures designed to improve the climate for long-term investment in the UK. This measure removed a distortion in the tax system, which encouraged companies to pay out their profits in dividends, rather than retain them for reinvestment in the business. It also allows pension schemes to make decisions on investment strategies based on their economic merits rather than for tax reasons.