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Use the Dividend income template to analyse dividends and distributions received by the company. Most dividends received by a UK company are exempt from corporation tax, so the template removes exempt dividends from taxable profit, identifies any non-exempt dividends that remain taxable, and captures exempt ABGH distributions that count towards franked investment income for marginal relief.

Table of contents 

When should I use this template?

Use it where the company has dividend or distribution income recognised in the accounts. The template splits that income into its exempt and non-exempt parts and treats each correctly.

Before you start

A business type must be selected in the Business type section of the Return information template. If none is selected, the template shows a warning and cannot calculate.

Background: how dividends are taxed

Under the distribution exemption, most dividends and distributions received by a company are exempt from corporation tax, so exempt dividends recognised in the accounts must be removed from taxable profit. A minority of distributions are not exempt and remain taxable — the template deals with UK and non-UK non-exempt dividends separately.

Exempt distributions that count towards franked investment income (ABGH distributions) are added to profits to give augmented profits, which affect the marginal relief limits and the rate of corporation tax.

Working through the template

Add a row per dividend or distribution and enter the amount recognised (in the Exempt for period and/or Taxable for period columns). For each item:

  • select the Territory (UK or Non-UK) from the dropdown, which determines whether a non-exempt amount is treated as a UK or non-UK dividend; and
  • tick the ABGH? box where it is an ABGH distribution. Only tick ABGH for exempt dividends that are not part of the group, as required by s279G(3) CTA 2010 — group dividends are excluded from franked investment income (Silverfin shows this as a hover note on the box).

Silverfin analyses the entries into:

  • Exempt dividends (removed from taxable profit);
  • Non-exempt dividends from the UK (taxable);
  • Non-exempt dividends from non-UK (taxable); and
  • Exempt ABGH distributions (counted towards franked investment income / augmented profits).

It reconciles the total analysed against the dividend income in the P&L / OCI analysis and flags any difference.

What flows through to the rest of Corporation Tax?

  • Exempt dividends are removed from the income of the relevant business type (an adjustment to profit).
  • Non-exempt UK and non-UK dividends flow to taxable income.
  • Exempt ABGH distributions flow to the CT600 as franked investment income, increasing augmented profits for the marginal relief calculation.

What rolls forward next year?

Dividend descriptions and their territory / exempt / ABGH classifications roll forward where relevant, so recurring dividend sources do not need to be re-set up each year.

Frequently asked questions

Why is my dividend income being removed from profit?

Most dividends are exempt from corporation tax, so exempt amounts recognised in the accounts are removed from taxable profit.

What does the Territory selector do?

It classifies a dividend as UK or non-UK, so any non-exempt amount is shown in the correct category.

When should I tick the ABGH box?

Only for exempt dividends that are not part of the group (s279G(3) CTA 2010). These count towards franked investment income and increase augmented profits for marginal relief.

Are any dividends taxable?

Yes — a minority of distributions are not exempt. The template keeps UK and non-UK non-exempt dividends taxable and shows them separately.

This article relates to the Dividend income template in the UK Corporation Tax workflow. It is provided as guidance and does not constitute tax advice.