Commentary

E1.416 Dividends from non-UK resident companies—general

Personal and employment tax

E1.416 Dividends from non-UK resident companies—general

Dividends from non-UK resident companies

E1.416 Dividends from non-UK resident companies—general

In general, dividends of a non-UK resident company are charged to income tax as savings and investment income on the amount arising in the tax year. The charge is on the person receiving or entitled to the dividends1. For HMRC's internal guidance, see HMRC Savings and Investment Manual SAIM5210. Guidance on dividend tax credits is at SAIM5102–SAIM5106. Other guidance is contained in HMRC International Manual, including guidance on foreign dividends at INTM164000–INTM164540.

This rule is modified in the case of shares acquired under a share incentive plan (see E1.417) and is subject to the general rules relating to assessment of foreign income2 regarding (see Division E1.6):

  1.  

    •     assessment on the remittance basis

  2.  

    •     deductions for expenses of collection or annual payments

  3.  

    •     relief for unremittable income

Dividend tax credits for years prior to 2016/17

The dividend tax credit was abolished in relation to dividends paid or arising (or treated as paid) and other distributions made (or treated as made) in the tax year 2016/17 or at any later time3. For years prior to that, UK dividends are accompanied by a tax credit of 10%, which satisfies the tax liability of basic rate taxpayers and is offset against the tax liability of higher rate taxpayers, bringing their effective tax rate on UK dividends to 25% (see E1.414). This treatment also applies to overseas dividends provided certain conditions are satisfied. These are discussed below.

Taxation of foreign dividends prior to 2016/17

The amount or

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