i turned 60 on saturday and as a result my brain has magically turned to mush again for the 2nd time this year , i think the first time was a trail run!
my client owns 100% of a UK close company and left UK in March 2013. if she receives dividends from this company in 2014 15 i presume that these will still be taxable in the UK in the same way that income from real property is or as the UK company derives most of its income from outside the UK will she escape tax.
she has moved to singapore and i think the divis are free of tax there , are there any withholding tax issues here
Nick
Replies (6)
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Taxable
Assuming you are happy she is definitely non-resident in the UK, the dividends will be taxable as they arise in the UK BUT, and its a bit but, the tax will be restricted to the amount already deducted from the dividend, i.e the 10% tax credit.
This means your client could effectively receive a dividend of any amount and this will be restricted to the 10% tax credit, meaning no higher rate or additional rate tax in the UK.
The caveat is always to consider the tax position in the country of residence but it appears you have already done this and it is win, win!
A warning would be that we have had a case where HMRC challenged the non-residence status with a view to making the (admittedly large) dividend chargeable to higher rate tax. So it is advisable to ensure the non-residence status is secure before declaring a large dividend.
Ps - happy birthday :)
If your client is a non-resident in the UK the dividend received will be 'disregarded' income and the tax payable on it will be limited to the 10% notional credit that comes with it. Which means no further tax payable.
As to the non-resident status it should be pretty straightforward - just work out the status applying the statutory residence test.
I know this is an old question but I have just put up a similar question with no replies as yet. In these circumstances, how does the dividend have to be shown on the UK tax return, in order to have it disregarded.
Non resident Dividend tax
I also asked a similar question but no responses. I intend to become permanently non-resident in the UK and retire abroad. I have some retained profits that I would like to draw when I live abroad to live on. As the Tax credit is no more what would be my Tax liability in the UK if I should never return and draw dividends abroad.
Update
How will this work from April 2016 given the 10% dividend tax credit will no longer exist?