Santander (Spanish) Dividends - Anyone with previous experience?

harryhound

Calling former Abbey shareholders?

Once upon a time, I had money saved with the Alliance & Leicester Building Society.
This demutualised and I found myself with some A & L shares.
A & L nearly became a victim of the credit crunch but managed to sell itself to
Spanish bank Santander.
I became the proud owner of 125 "dematerialised" electronic Santander shares.
Santander decided to boost its balance sheet by having a rights issue, in which I did not participate (so I received a modest cheque for the sale of my rights).
Presumably I am still the owner of 125 shares.

It is the tax treatment of the dividends that I need to understand.
I have had two dividends in tax year 08/09, one in November and one in February.
However the payment slip from Santander is woefully inadequate:

Taking November 08 as typical the black, white and red banded sheet of A4 is mainly given over to getting me to reinvest the dividend.
It is undated.
It explains that the second interim dividend is EUR 0.135234 (GBP 0.106280) gross per share paid in November.
By a process of elimination I have identified a payment of GBP 10.89 in my bank account. My calculator makes GBP 0.10628 x 125 = GBP 13.29 ?
So there has been some Spanish witholding tax taken off?
There is a similar effect in February, when the dividend is GBP 0.10997 per share
and the amount credited in the bank account appears as GBP 11.27.

Perhaps there is a web site somewhere to advise UK shareholders what to do with these foreign dividends?

Can such a foreign dividend be reported using the on-line self assessment tax return?

(I also have a modest payment from an estate in probate complete with tax deducted figures on an R185- can that be put through the on-line system for year 08/09 ? )

Harry

dzug1

http://www.santandershareholder.co.uk/dividends/spanish_withholding_tax has quite a lot of detail if you read through it.

There's certainly a provision in a paper tax return for foreign dividends - I would imagine there must be an equivalent online.

The tax treatment in the UK is that the Spanish witholding tax satisfies any normal rate UK tax due on the dividends. Unless you need to submit a tax return for other reasons, you don't need to report anything to the taxman.

You don't need to report the R185 income - again unless you need to do a tax return for other reasons. You've paid the tax (or rather the estate has), you don't need to do any more. If you do a tax return, include it. If you don't, then you don't need to.

Except that Santander shares have done rather well recently I'd have said it would have been a lot better to have ditched the A&L shares at the takeover point - certainly a lot simpler

harryhound

Thanks - I'm on the treadmill of self assessment already - self employed in a small way.

I notice that the paper return allows foreign dividends of up to 300 GBP to be entered as a figure and any tax to be entered as another figure. I think this was a concession introduced a few years ago to cater for the small army of ex Abbey shareholders.

I've just got rid of a source of foreign income and been landed with another.
I don't want to spend time working my way through the on-line system to suddenly find I've got a figure that it won't accept in the form of the R185 "Trust Income" (all basic rate tax paid) or "Foreign" and then find that it is too late to do the chore on paper.
That happened to me one year because I had a small amount of P60 income and my employer had not given me the correct PAYE reference and the on-line system would not accept it. Not good news in the last two weeks of January.

Harry,

PS I've followed your link and found this:
If you are a UK resident you may also be subject to UK tax on dividends paid by Santander. The dividends will not carry a tax credit. Credit will, however, generally be given for the Spanish withholding tax of 18%. You will be sent dividend statements giving you the necessary details so you can claim this credit in your tax return.

I'm not sure about the last sentence but I had already worked out that 18% had gone missing between the dividend statement and my bank account - so we are all singing from the same hymn sheet now.

dzug1

It might be a good time to dump the shares if they are causing too much tax hassle. They will have recovered any loss since you acquired them

The nominee service will sell them for you - and take care of the hideously bureaucratic Spanish paperwork requirements - and avoid a fine for not submitting it promptly