Santander Shares tax

Grohl

Please would anyone be able to tell me why I have to pay Spainish Hold Tax on my share dividends?

I don't earn enough to pay income tax and I don't pay tax on my savings, so I do not understand why I have to pay tax on my dividens.
Before the Abbey became Santander I didn't pay tax.

I have written to Santander to ask why, but they don't really answer my question, they just tell me to complete my tax form, but I don't pay tax, so I don't complete a tax form.....

I would appreciate any advice.

Thanks
Linda

oldvicar

It would effectively be the same even if you held shares in a London listed company, rather than a foreign one.

In the case of British shares they come with a 10% tax credit, which cannot be reclaimed by non-taxpayers. It would have been like this with your Abbey shares.

EDIT: I GOT THIS WRONG - see later post.

hermante

Grohl wrote: »

Please would anyone be able to tell me why I have to pay Spainish Hold Tax on my share dividends?

I don't earn enough to pay income tax and I don't pay tax on my savings, so I do not understand why I have to pay tax on my dividens.
Before the Abbey became Santander I didn't pay tax.

I have written to Santander to ask why, but they don't really answer my question, they just tell me to complete my tax form, but I don't pay tax, so I don't complete a tax form.....

I would appreciate any advice.

Thanks
Linda

Are the shares traded in Spain or in the UK?

oldvicar

Sorry about my earlier post.

The shares are tradeable in UK. And there's lots of information on the Santander website about the witholding tax, starting here:

http://www.santandershareholder.co.uk/shareholder-services/faq/#spanish-withholding-tax


In a nutshell, if you do pay UK tax then you can get a little bit back. But if you don't pay UK tax there is little a modest investor can practically do but grin and bear it

sabretoothtigger

The shares are Spanish, its not a UK share. BNC is an ADR or kind of proxy. They were going to float UK section of the business but when markets value your company at 5 PE its not likely they'd bother

UK laws changed anyway, you cant get divs tax free. There is only one way to avoid taxes is by receiving payment in shares then selling those shares, this registers as capital gain which is free till 10k profit, ask them about scrips if you own alot

ChiefGrasscutter

This aspect of taxation as the shares were going to listed only in Spain was much discussed in the press when Santander took over abbey in the mid 2000's
All small investors were being advised to sell to avoid these complications.

gadgetmind

sabretoothtigger wrote: »

There is only one way to avoid taxes is by receiving payment in shares then selling those shares, this registers as capital gain which is free till 10k profit, ask them about scrips if you own alot

Can you expand on this?

My understanding is that scrip dividends are treated as income.

http://www.hmrc.gov.uk/manuals/saimmanual/saim5150.htm

Ark_Welder

gadgetmind wrote: »

Can you expand on this?

My understanding is that scrip dividends are treated as income.

http://www.hmrc.gov.uk/manuals/saimmanual/saim5150.htm

They are.



.

barak

gadgetmind wrote: »

Can you expand on this?

My understanding is that scrip dividends are treated as income.

http://www.hmrc.gov.uk/manuals/saimmanual/saim5150.htm

Anything to do with Banco Santander CDIs seems to be complicated!

Santander's own guidance suggests that shares received from their scrip dividend scheme are not subject either to Spanish Withholding Tax or to UK Income Tax.

http://www.santandershareholder.co.uk/index.php/download_file/-/view/747/
[Page 14]
For UK tax purposes, your receipt of additional Santander shares should not give rise to
taxable income or to a disposal for the purposes of taxation of chargeable gains. Spanish
withholding tax will also not be deducted if you receive shares (Option 3). Your new shares
should be treated as part of the same asset as your existing holding of Santander shares
for the purposes of taxation of chargeable gains, with any base cost in your existing
Santander shares being apportioned between your existing shares and your new
Santander shares.

sabretoothtigger

The main point for the OP would be he does not pay income tax so it would be zero anyway ?

barak

sabretoothtigger wrote: »

The main point for the OP would be he does not pay income tax so it would be zero anyway ?

That seems right!

As oldvicar said, there's lots of info at the FAQ page, but it's full of words and phrases such as "generally", "should be able" and "seek professional advice", so it doesn't resolve some of the questions.

http://www.santandershareholder.co.uk/shareholder-services/faq/

I have Santander shares as well as some other 'Foreign Income' received Gross, so have to complete the Self Assessment Foreign Pages which can be quite a challenge at first sight!