Foreign dividends and income tax
HMRC has published a new Revenue & Customs Brief covering changes to the income tax credit for foreign dividends.
The changes, which took effect from Budget day on 22 April 2009, are relevant to certain individuals who receive dividends from foreign companies. The Brief specifically relates to shareholders in:
- foreign companies with a holding that is 10% or more of the issued share capital of the company;
- foreign companies with a holding that is 10% or more of a specific class of share in the company; or
- offshore funds.
Full details of the changes and how they affect individual taxpayers will be given in the notes to the foreign pages of the self sssessment Return for 2009-10.
Qualifying individuals will benefit from a dividend tax credit by completing the relevant foreign pages of the self-assessment return. The dividend tax credit is not refundable but can reduce a taxpayer’s overall tax bill.
Other individuals with shareholdings of less than 10% in foreign companies have also been entitled to a non-payable tax credit provided that the foreign company is not an offshore fund.