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dividends from a UK company when working overseas

dividends from a UK company when working overseas

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Not sure if this is a stupid question or not.  If a director of her own company is working abroad and classed as non-resident receives dividends from that company as well as her non-resident salary, do those dividends need to be entered on to the UK return?   This would push her into higher rates and result in a laibility on income received overseas.

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By Matrix
07th May 2015 08:33

If she is non-resident then which UK tax return?

I expect she would need to declare them in her country of residence.

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By WillowTree
07th May 2015 10:15

She has been asked to do a UK tax return and the dividend level is sufficient to push her into higher rate tax if they weren't disregarded income.  Do you know how/if they actually need to be shown on the UK return?

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By Banzai
07th May 2015 10:27

UK source income does need to declared but check the rules on "excluded income" etc.

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By taxguru
07th May 2015 10:56

A non-resident's liability to income tax is limited to the 10% credit included in the dividend income (s.811 ITA/07). Secondly, in the case of a non-resident employee 'taxable earnings' only include general earnings in respect of duties performed in the UK 9s.27 ITEPA/03). So there appears to be no liability to UK tax in respect of the income earned by your client. When you file your tax return if your client claims to be non-resident on the tax return software, it shouldn't show up any liability to tax??

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By WillowTree
07th May 2015 11:45

Thank you all, but the dividends will need to go on to page 3 in the normal way, I am just not sure where else I have to enter the counter balance to ensure it shows in the calculations as being excluded.  Am I having a blond moment?

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Replying to Duggimon:
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By taxguru
07th May 2015 12:07

Computation sheet

WillowTree wrote:
 Thank you all, but the dividends will need to go on to page 3 in the normal way, I am just not sure where else I have to enter the counter balance to ensure it shows in the calculations as being excluded.  Am I having a blond moment? 

First of all I've only limited knowledge of how software work; but in this case out of curiosity I opened a client account, claimed the non-resident option, and put in £100,000 as dividend income. The computation  is as follows:

Dividends from UK companies (plus 10% tax credits)111,111.00   Total income received111,111.00   minus Reduced Personal Allowance    Income excluded from this calculation111,111.00   Total111,111.00   Total income on which tax is due   How I have worked out your Income Tax Total income on which tax has been charged   plus Tax on income excluded from this calculation11,111.10Income Tax charged11,111.10 minus 10% tax credits on dividends from UK companies (not repayable)11,111.10Income Tax due after dividend tax credits Total Income Tax due

So what is the problem???????

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By JamesAnd
07th May 2015 11:54

I would imagine, in line with what TaxGuru has said, the completion of the supplementary residency pages will deal with the exclusion.

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By JamesAnd
07th May 2015 11:59

And also in line with what Taxguru has said, unless there are other circumstances you haven't mentioned that require the return to be completed, I would ask HMRC to withdraw the return request, as there is no higher rate liability on the dividends.

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By WillowTree
07th May 2015 13:12

Thanks taxguru et al, suitably chastised!

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