Tax on shares for children

andersonwl

When Iberdrola took over Scottish Power, My mother & father transferred ownership of their shares and split them between their Grandchildren. At present my daughter is paying "Spanish witholding tax" on her dividends. Does anyone know whether the taxing of a minors income is the norm in Spain? If not, how do I go about changing her tax status?

DavidHayton

A non-taxpayer cannot get foreign witholding tax refunded.

You could re-invest the money in a UK listed company, but UK dividends are also paid net of income tax at the basic rate (currently 10% on dividends). Before Mr Brown became Chancellor, non-tax payers could get this refunded. But not now.

David

andersonwl

DavidHayton wrote: »

A non-taxpayer cannot get foreign witholding tax refunded.

You could re-invest the money in a UK listed company, but UK dividends are also paid net of income tax at the basic rate (currently 10% on dividends). Before Mr Brown became Chancellor, non-tax payers could get this refunded. But not now.

David

Thanks David.

I realize that I cannot reclaim tax already paid. When I was under 16, I didn't pay income tax on dividends on shares I owned. What I would like to know is do children in Spain pay tax? And if they don't, how do I go about preventing my daughter paying tax on future dividends

DavidHayton

andersonwl wrote: »

When I was under 16, I didn't pay income tax on dividends on shares I owned.

That's the way that it used to be before Mr Brown's reforms in 1997. The same reform that hit pension funds also hit non-tax payers. Now they have to pay basic rate tax (albeit at 10%) on UK dividends just like everyone else.

andersonwl wrote: »

What I would like to know is do children in Spain pay tax? And if they don't, how do I go about preventing my daughter paying tax on future dividends

You could sell the foreign shares. I really don't think that you will get round the witholding tax. If you do, please let me know: I have a similar problem with money invested in Canada. Canada applies a witholding tax of 15% which is annoying because UK dividend tax is 10% (at the basic rate) and I can't reclaim the extra 5% (or even offset it against other income tax).

If you don't mind me asking you a question, what is the rate of the witholding tax applied by Spain?

Best wishes,
David

andersonwl

19% springs to mind

CLAPTON

andersonwl wrote: »

Thanks David.

I realize that I cannot reclaim tax already paid. When I was under 16, I didn't pay income tax on dividends on shares I owned. What I would like to know is do children in Spain pay tax? And if they don't, how do I go about preventing my daughter paying tax on future dividends

I am curious, children under 16 can't hold shares in the UK; the shares must be held in trust

andersonwl

It's 26 and a half years since I turned 16