Foreign div, property and interest income

Treatment of foreign dividends, rental property and interest income for UK tax purposes

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Hi Everyone,

Client has foreign dividends income of $4k from a Country that has double tax treaty with UK and for which non-resident withholding tax at 15% was already deducted by the payer in the relevant Country.  Also, he has some small interest income but reasonably large property rental income of $4k for 2016-17.  To complicate this further, he also has unused tax losses in the country to the tune of $40k from prior years.  My question is should he be declaring foreign income (all three types) especially when tax losses is used, he is not liable for any tax liability in the country of earning and therefore should not be declared for UK tax purposes?  Or should the unused tax losses from foreign country be forgotten for 2016-17 for UK tax purposes as historically this was never declared to HMRC?  Any help with this query from experts will be highly appreciated as I had very limited dealings with foreign earnings.

Thanks

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By Accountant A
19th Oct 2017 16:08

There is not nearly enough information for anyone to give a sensible answer. We don't even know which currency you are referring to. (I can't guess from the clues you have given.) Are those US dollars, Singapore, Australia or other?

Are we to assume he has any UK income? If he's your client, what have you been doing previously with his foreign income?

I don't think it is fair to your client to be piecing together your advice from here and using him as a learning exercise. You need to do some research yourself or admit this isn't your area of expertise and pass the client on to another adviser.

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By quadri78
19th Oct 2017 18:30

Additional information if it helps- client is a UK basic rate tax payer and has been for the past 7 years. UK income of £39k in 2016-17 which includes £30k dividends and £9k employment income. Foreign dividends received in the year 2016-17 only. Un-used foreign income tax losses were from previous years due to losses on sale of multiple properties overseas. Previous years'property income was negligible and was offset against losses which are now down to $40k. Country involved is New Zealand and previous overseas income or losses never included in UK returns. Admit not an expert on foreign income but this shouldn't put me off progressing further. Interested in experiences from other members here. Thanks

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By Matrix
19th Oct 2017 20:12

Be careful if he is non UK domiciled since any tax advice you give should take this into account - an accountant was successfully sued a few years ago for not doing so.

If your client omitted the foreign income the last few years then did he claim the remittance basis? It looks as if his income exceeds £2k. https://www.gov.uk/tax-foreign-income/non-domiciled-residents

It may be necessary to file amended returns.

When completing the foreign income sections include the foreign income and the foreign tax on that income, if any and if it is a creditable tax and calculate the amount eligible for double tax relief.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

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By David Treitel
20th Oct 2017 09:55

Did the client make a s16ZA election? If not, are the capital losses allowable?

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