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Dividend income for non residents

Does this now come with a 7.5% tax credit?

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UK citizen is now non-resident.   If they receive dividends from a UK company over the £2k tax free threshhold, is the 7.5% ordinary tax rate treated as being paid?  

An example in a book by 'Golding and Connelly advising on British Expats' suggested not but I think the legislation says otherwise.  ITTOIA 2005 s399.  

Thanks for any confirmation!! 

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Caroline
By accountantccole
19th Feb 2020 10:57

There's a 7.5% credit so effectively no tax to pay for a BR tax payer. Income disregard rules likely to apply at higher levels

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By carnmores
19th Feb 2020 17:11

If its own company it could still be taxable in UK even if non resident under certain conditions

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By David Heaton
24th Feb 2020 09:59

1. There's no deemed tax credit - has the client actually paid the 7.5%%, in (NB: not'for', but 'in') the period in which the offset is required?
2. Where is the client resident? Don't assume that the state of residence uses UK tax principles. Some states don't give a credit against their own taxes. Instead, they exempt income that's foreign source, or income that's foreign source and already taxed. Or they use 'exemption with progression', so a proportionate part of their equivalent of personal allowance is used against the foreign income, and part of their basic rate band, and part of the higher rates. You need to know how their tax system works.
3. Is there a double tax treaty between the state of residence and the UK, and if so what does it say about dividends?

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Replying to David Heaton:
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By Wanderer
24th Feb 2020 10:05

David Heaton wrote:

1. There's no deemed tax credit -

ITTOIA 2005 s399?
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By davexyz
24th Feb 2020 09:59

I believe that an election can be made

You can choose to have UK dividends deemed as "excluded income" however this does mean that you lose the right to the tax free allowance.
So it is now a choice if you have other UK derived income as to what you choose for the greatest tax benefit. i.e. tax is paid from £0.00 on other income for example rental profits

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By Joe Alderson
24th Feb 2020 11:13

Yes they may be entitled to a tax credit if they are non-resident. I don't think ITTOIA 2005 s399 was considered when the rules on dividends were changed and the 0% dividends allowances created.

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