TSEM3270 | Capital items that are income for tax purposes: Trust income: stock (scrip) dividend

If a shareholder takes up the offer of shares in place of a cash dividend, this is a scrip or stock dividend. The cash equivalent is the amount of the scrip or stock dividend. The instructions are at CG33800 onwards.

The treatment in the hands of trustees depends on the category of trust. If the trust is chargeable at the special trust rates the cash equivalent of the stock dividend is chargeable at the dividend trust rate, with a credit for tax at the dividend ordinary rate. TSEM3019 explains which trusts are within ITA/S479.

TSEM3275 has information about enhanced stock (scrip) dividends.