How are individuals taxed on distributions received from non-UK resident companies prior to 6 April 2016? [Archived]
How are individuals taxed on distributions received from non-UK resident companies prior to 6 April 2016? [Archived]

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • How are individuals taxed on distributions received from non-UK resident companies prior to 6 April 2016? [Archived]
  • Distributions paid by a non-UK resident company
  • The charge to tax
  • Non-UK tax
  • Tax credits on foreign distributions
  • Qualifying distributions received with no tax credit
  • Non-qualifying distributions received

ARCHIVED: This Practice Note has been archived and is not maintained.

The way in which individuals are taxed on distributions was substantially changed in Finance Act 2016. This Practice Note explains the rules that apply to distributions made prior to 6 April 2016 by non-UK resident companies to UK resident and domiciled individuals.

For details of the tax treatment of distributions made prior to 6 April 2016 by UK resident companies, see Practice Note: How are individuals taxed on distributions received from UK resident companies prior to 6 April 2016? [Archived] and for information on the tax treatment of distributions made on or after 6 April 2016, see Practice Note: How are individuals taxed on distributions received from companies?

An individual who is subject to UK income tax in receipt of a distribution of an income nature from a non-UK resident company will, subject to certain exclusions, be:

  1. subject to income tax on that distribution at the special dividend rates of tax: 10%, 32.5% and 37.5%, and

  2. entitled to:

    1. a tax credit equal to one ninth of the distribution received, grossed up for foreign tax, where:

      1. the distribution is a qualifying distribution

      2. the individual is UK resident or an eligible non resident, and

      3. one of the three eligibility conditions is met

    2. be treated as having paid income tax of 10% on the