Self assessment tax return - help with foreign pages

itwasntme001

bowlhead99 said:

itwasntme001 said:

Thanks a lot Bowlhead99, that is very helpful.

One final question.  The only part of the foreign pages I am not so sure about is whether to and what to enter for the tax.  There is "Foreign tax" and there is "Special Withholding Tax".  Do I enter the 15% tax paid for the US shares in the former or later section?  Obviously, as you say, I would enter nothing for both for Lindsell Train.  Also, since I am within the dividends allowance, there would be no need to apply for any foreign tax credit relief I believe.

Assuming you're just a normal UK resident and citizen, and have never been non-UK domiciled using the special 'remittance basis of taxation', then 'Special Withholding Tax' isn't something that could be relevant to you.  Your 15% US tax that was taken at source will go in the "Foreign Tax taken off or paid" box. (column C on the paper version of the form). Even if they deducted 30% you should only put 15% here because that's the most you should have paid under the tax treaty.

The two ways to relieve the foreign tax are:
a) Foreign tax credit relief. For that you would tick the box to say you want to claim FTCR for the foreign tax paid; they calculate your normal UK tax on your income with and without the gross $100 foreign income, and allow you to claim the greater of foreign tax paid ($15) and the UK tax due.
b) Just deduct the $15 from the $100 to leave $85 of foreign income and pay full UK tax on that $85.

You can have whichever method gets you the best result; but in your case if all the gross income is within the dividend allowance and earning the income doesn't cause you to lose any other allowances (e.g. loss of personal allowance, reduction of personal savings allowance, child benefit clawback etc) and you don't have anything complicated in your tax returns then there is no real need to put in a claim because the foreign income didn't give you a tax liability anyway. If your UK tax this year is going to be exactly the same with or without the US dividends, no worries.

Thanks again, this has been really helpful to finalise my return.

For the foreign tax relief a) method, shouldn't the claim be the "smaller of" rather than "greater of"?  As presumably you can not claim more than the foreign tax paid in the first place?  I may be wrong as have not looked into it in detail, because as mentioned above, FTCR would not be applicable to me.

bowlhead99

itwasntme001 said:

bowlhead99 said:

itwasntme001 said:

Thanks a lot Bowlhead99, that is very helpful.

One final question.  The only part of the foreign pages I am not so sure about is whether to and what to enter for the tax.  There is "Foreign tax" and there is "Special Withholding Tax".  Do I enter the 15% tax paid for the US shares in the former or later section?  Obviously, as you say, I would enter nothing for both for Lindsell Train.  Also, since I am within the dividends allowance, there would be no need to apply for any foreign tax credit relief I believe.

Assuming you're just a normal UK resident and citizen, and have never been non-UK domiciled using the special 'remittance basis of taxation', then 'Special Withholding Tax' isn't something that could be relevant to you.  Your 15% US tax that was taken at source will go in the "Foreign Tax taken off or paid" box. (column C on the paper version of the form). Even if they deducted 30% you should only put 15% here because that's the most you should have paid under the tax treaty.

The two ways to relieve the foreign tax are:
a) Foreign tax credit relief. For that you would tick the box to say you want to claim FTCR for the foreign tax paid; they calculate your normal UK tax on your income with and without the gross $100 foreign income, and allow you to claim the greater of foreign tax paid ($15) and the UK tax due.
b) Just deduct the $15 from the $100 to leave $85 of foreign income and pay full UK tax on that $85.

You can have whichever method gets you the best result; but in your case if all the gross income is within the dividend allowance and earning the income doesn't cause you to lose any other allowances (e.g. loss of personal allowance, reduction of personal savings allowance, child benefit clawback etc) and you don't have anything complicated in your tax returns then there is no real need to put in a claim because the foreign income didn't give you a tax liability anyway. If your UK tax this year is going to be exactly the same with or without the US dividends, no worries.

Thanks again, this has been really helpful to finalise my return.

For the foreign tax relief a) method, shouldn't the claim be the "smaller of" rather than "greater of"?  As presumably you can not claim more than the foreign tax paid in the first place?  I may be wrong as have not looked into it in detail, because as mentioned above, FTCR would not be applicable to me.

Yes correct - my typo. IF it was applicable to you, you couldn't claim any more than the foreign tax you'd paid (restricted by treaty) and you couldn't claim any more than the UK tax you'd suffered. So it is the 'lesser of' rather than 'the greater of' which would cap your claim. Will edit the earlier post.