Foreign dividends question

starray

Hi, need some help with filling my tax form. 

I’m resident in the U.K. and I have some shares in another country, where I come from originally. For the tax year 2019 to 2020, the shares company has put dividends in my foreign bank account to the value of about GBP 100. Do I have to declare it as foreign income in the U.K. on my tax return? The money will not cross over into the U.K., but will stay in the foreign bank account.  Dividends received on these shares in the other country are not taxable.  

Thanks! 

Jeremy535897

If you are not domiciled in the UK for tax purposes, see https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1#the-remittance-basis-of-taxation

"Exemption for small amounts of foreign income

9.11 If you’re employed in the UK, are not domiciled here and have only small amounts of foreign income you can benefit from an exemption on amounts you remit to the UK.

9.12 To qualify for the exemption you must meet all of the following conditions for a tax year:

• you’re UK resident
• you’re not domiciled in the UK
• you’re employed in the UK
• you’re a basic rate taxpayer (based on your worldwide income and gains)
• your income from overseas employment for the tax year is less than £10,000
• your overseas bank interest for the tax year is less than £100
• all your overseas employment income and interest is subject to foreign tax
• you’ve no other overseas income and gains
• you’re not otherwise required to complete the Self Assessment tax return

9.13 If you meet all these conditions you will be automatically taxed on the arising basis for that year and you:

• will not be liable to UK tax on your foreign income, either when it arises or when it is brought to the UK
• do not need to complete the Self Assessment tax return in respect of your foreign income for that tax year
• do not need to claim the remittance basis

9.14 If your circumstances are such that, despite meeting the above conditions, you want to be taxed on the remittance basis you will need to claim and complete a Self Assessment tax return.

Less than £2,000 unremitted foreign income and gains arising or accruing in the tax year

9.15 If your unremitted foreign income and gains arising or accruing in the tax year are less than £2,000, you can use the remittance basis without having to complete a Self Assessment tax return. In this case you will:

• be automatically taxed on the remittance basis (unless the rules at paragraph 9.11 apply)
• retain your entitlement to UK Personal Tax Allowances and to the annual exempt amount for Capital Gains Tax
• not have to pay the Remittance Basis Charge (RBC) if you’re a long-term UK resident

9.16 If you do not meet the criteria in paragraphs 9.11 and 9.12, but:

• you’ve less than £2,000 unremitted foreign income and gains
• you choose to be taxed on the arising basis

you should complete a Self Assessment tax return to declare your foreign income and gains. The Self Assessment guidance on our website gives more detail."

If you are domiciled in the UK for tax purposes, you need to declare them.

starray

Thanks for the information Jeremy535897.   From reading that I guess I have to declare as I am domiciled in the U.K. I live here permanently.   Can I just check - On the tax form, it says "If you received any foreign income, do you need to complete the foreign section?"  So I should choose YES?   And then ...this is the bit I don't understand....it says - 

Under Foreign income details (Page 1 of 2)

Were you unable to transfer some or all of your overseas income to the UK?

No

Yes - some

Yes - all

I'm not unable to transfer the money, I just didn't. But there isn't an option for that? 

starray

Let's say I choose the No option.  I am then led to the Dividends section where it says - Foreign dividends (up to £300) (do not include this amount on your foreign pages). Enter the amount in sterling after foreign tax was taken off: (optional).  Dividends from my shares are not taxable in the other country. so no foreign tax was taken off.  
I'm finding it all very confusing. Help! 

Jeremy535897

There is a let off from tax if you cannot actually remit the income here (for example because of exchange controls). You answer "no", as you could have transferred it all to the UK.

As you paid no foreign tax, the amount to convert to sterling is the full amount of the dividend.

starray

Thanks for your help!  I only know the amount in foreign money.  Do I just use something like xe.com to do the conversion? 

starray

I don't understand why there are two separate sections for foreign income.   You can put in your foreign dividends in the Foreign income types section but also in the Dividends section?  Which section should I use?

Jeremy535897

Monthly rate should do:
https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2020-monthly
If the total received converts to £300 or less, ignore the foreign pages and put the sterling amount in box 6 of SA100. Put zero in box 7.

starray

Thanks!! 

calcotti

starray said:

I don't understand why there are two separate sections for foreign income.   You can put in your foreign dividends in the Foreign income types section but also in the Dividends section?  Which section should I use?

It’s so this with only a small amount don’t have to fill out the foreign income pages.

Mothman

Apologies for hijacking the thread, but I was recently given some 'Sun Life of Canada' shares which have paid approximately £600 of dividend this tax year. As the dividend is less than my £2000 annual dividend allowance, will I have to declare this to HMRC and does this mean registering for self assesment? My only other income is pension drawdown up to the limit of my personal allowance so I currently pay no tax.