Foreign dividends

Produced by Tolley
Foreign dividends

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Foreign dividends
  • When is the dividend taxable?
  • Can the taxpayer obtain UK tax relief for the foreign tax paid on the foreign dividend?
  • Can the taxpayer also claim a 10% dividend tax credit in the UK (for dividends received before 6 April 2016)?
  • Calculating the tax credit (dividends received in 2015/16 and prior years)
  • Reporting overseas dividends on the tax return ― arising basis
  • Overseas dividends total £300 or less
  • Total overseas dividends over £300
  • Remittance basis and dividends
  • Reporting overseas dividends ― remitted in the same tax year
    • More...

Overseas dividends are those received from companies not resident in the UK. ‘Dividends’ includes certain other distributions, see the Cash dividends and Non-cash dividends guidance notes. For the rate of UK tax on taxable dividends, see the Taxation of dividend income guidance note.

For tax purposes, the UK territories of the Isle of Man, Jersey and Guernsey are classed as overseas.

When is the dividend taxable?

The answer to this question depends on the individual.

Those who are resident and domiciled or deemed domiciled in the UK are taxable on their worldwide income (and gains) in the tax year in which these are received and should declare these on their tax returns. This means they are taxed when the foreign dividends are paid to them, for instance, by being credited to a bank account. For more on these terms, see the Residence ― overview and Domicile guidance notes. The taxation of income and gains in the year of receipt is commonly known as the arising basis of assessment.

Individuals who are not domiciled or deemed domiciled in the UK are eligible to access the remittance basis of assessment. Someone who is using the remittance basis is thus not taxed until the foreign income is remitted (brought) to the UK, under the income tax rates that apply in the year of remittance. See the Remittance basis ― overview guidance note. Care is needed, as remittances can happen by accident. See the When are income and gains remitted? guidance note.

If an individual who is eligible to access the remittance basis chooses not to do so, they are taxable on their worldwide income in the year it is received (the arising basis of assessment). This means they must declare all their foreign income and gains in the year in which it arises, even if it is not brought into the UK. See the Remittance basis ― overview guidance note for detail on why an individual may choose not to access

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