§ Derek ConwayTo ask the Chancellor of the Exchequer what the basis is for the policy of allowing tax deducted from bank and building society deposits to be reclaimed, but not from dividends paid on shares and unit trusts; and if he will make a statement. [14085]
§ Ruth KellyIncome tax is deducted at source from bank and building society interest, and the tax deducted can be reclaimed where a saver is not liable to pay it. There is no tax deduction at source from dividends, and so no tax to reclaim. Dividends carry a tax credit which satisfies the tax liability of investors with income up to the basic rate limit, but non-taxpayers cannot claim payment of this tax credit.