Personal Taxation

Various types of UK tax may apply to your shareholding in Centrica plc as an individual.

For example:

  • income tax may be payable on dividends paid by Centrica;
  • selling shares may incur a capital gains tax liability; and
  • shares sold as part of the liquidation of an estate after death may result in an inheritance tax liability.

Personal circumstances will vary, and the above list is not exhaustive. The following information should not be taken as advice or acted upon without seeking appropriate assistance from an independent financial adviser or other qualified tax professional.

Neither Centrica nor Equiniti are permitted to offer financial or tax advice.

Even where your tax-free Personal Allowance is used up, for example, on your Centrica salary, everyone is entitled to a dividend allowance that means you won’t have to pay tax on the first £2,000 of your dividend income for 2022/23.  This allowance is reduced to £1,000 from 6 April 2023 and further reduced to £500 from 6 April 2024.

Headline rates of dividend tax changed from 6 April 2022 onwards.  You’ll pay tax on any dividends you receive over the dividend allowance at the following rates:

  • 8.75% on dividend income within the basic rate band
  • 33.75% on dividend income within the higher rate band
  • 39.35% on dividend income within the additional rate band

Current legislation means that when selling shares, a shareholder may be liable to Capital Gains Tax (CGT) depending on the amount of the gain and the shareholder’s circumstances at the time. The CGT allowance threshold for individuals, which is £12,300 for 2022/23, reduces to £6,000 from 6 April 2023 and is further reduced to £3,000 from 6 April 2024. 

Shareholders normally only have to pay CGT at the point of sale of the shares.  The gain is calculated by subtracting the market value of the shares on the day they were acquired from the value on the day they were sold. If the total gains from the disposal of all assets (including shares) in any one tax year exceeds the annual threshold, a CGT liability will apply. CGT on share gains above the threshold will typically be payable at 10% to 20% depending on your other income.

Please note the above is the general application of CGT to share sales.  Where shares are received through an HMRC tax approved scheme, such as the Centrica Profit Share Award (Share Incentive Plan), the tax treatment may be different (more or less tax, or income tax rather than CGT, may be payable).  Further, even for general shareholdings CGT can be complicated, particularly where shares have been acquired over a number of years.  You may, therefore, wish to contact an independent financial/tax adviser before making a sale.

When disposing of shares that were received as a gift the gain is normally calculated using the market value of the shares on the day they were received as is the case for inherited shares. 

Transferring shares to a spouse may not, typically, give rise to a CGT charge at that point, however, when the spouse later sells the shares, they must calculate CGT based on the original value, not the value at the time of transfer.

Further information is available at:

https://www.gov.uk/topic/personal-tax/capital-gains-tax

A charge to Inheritance tax (IHT) typically arises when someone dies but can also be payable in other circumstances, such as when assets are transferred into trust.  Tax is payable if the estate on death or the value of assets transferred (including shares) is more than the IHT threshold. The current headline tax threshold is £325,000 and is set at that level until 2027/28.  The standard IHT rate is 40% where tax is payable.

Please note that as with CGT, IHT can be complicated and the threshold may differ (or IHT may not be payable on death) where an estate, or part thereof, is left to a spouse or children/grandchildren.  If you receive assets from an estate or are responsible for dealing with the estate of the deceased (i.e. you are the executor of a will) you may wish to engage the help of a solicitor or other agent to ensure all obligations are met. 

Further information is available at:

https://www.gov.uk/inheritance-tax

Shareholders who wish to invest in an ISA should consult their independent financial adviser. There is no endorsed ISA product specifically for Centrica plc shares.  The overall annual ISA limit for the tax years 2022/23 and 2023/24 is £20,000.