How to correctly enter US dividends in online tax return?

I have >£2000 of foreign dividends and therefore need to fill in the foreign dividends online pages. The US dividends have been charged a 15% withholding tax at source by the US authorities since a W8-BEN has been filled in. How do I enter these dividends into the online self-assessment form? I understand I have to submit the gross dividend and the tax paid. But should I tick the "foreign tax credit relief" box or not? And it I did so, what is the correct rate of relief allowed? I cannot understand the guidance on the HMRC website. Thanks, David

Hi,

Article 10(2)(b) of the UK and USA double taxation agreement allows for both countries to tax the dividends and limits Foreign Tax Credit Relief for dividends to a maximum of 15%.  

Uk/USA Double Taxation Agreement - 2002

In the section of the online tax return for foreign dividends, you should enter a reference for the dividends (to help you identify them), the country they are from, the amount of dividend and the tax deducted. The special witholding tax box is for tax deducted under the terms of the European Savings Directive and equivalent third party agreements. This tax will be in addition to any foreign tax deducted by the country of origin of the payment. Please select the rate of 15% and then select yes to the Foreign Tax Credit Relief, only if you want to claim this relief. Click 'add'. Repeat this process until you have entered all of the dividends. You should complete all of the tax return before viewing your calculation. Take a note of the tax due on your dividends. The FTCR is up to a maximum of 15% of the tax deducted in the USA.

Thank you.

Hi, I have a similar query for my 2022/23 Self-Assessment but, having followed the advice above, am receiving an error message. My context is slightly different because my US dividends are less than £2000 but I do have UK dividends in excess of £2000. The " tailor your return" notes for Foreign Income state "also select 'Yes' if you want to claim Foreign Tax Credit Relief ..." which presumably applies in my case. I've followed the instructions in the original thread: Country = USA; Amount of Income arising before tax taken off = 1062; foreign tax taken off = 160; special withholding tax = blank; do you wish to claim foreign tax credit relief = YES; rate of tax credit relief allowed = 15% selected from drop down box. When clicking "ADD", I get an error message "WARNING:Make sure you have selected and entered the correct amount of Foreign Tax Credit Relief. Select the percentage rate from the list provided". ... which of course I have done.

HMRC, are you able to respond please? I should add that, having completed my self-assessment, this income is not appearing in View your calculation. Should I submit my Self-Assessment and assume you will be manually taking this into account? Look forward to hearing from you.

Hi,

This may be just an advisory message but could also be that due to the level of your total income, your dividends may not be liable to tax at 15%. It may only be 8.75% and you would need to change the rate.

Thank you.

Many thanks for your response. Having unsuccessfully tried 2-3 times on previous days, it worked this morning. (N.B. As a higher rate taxpayer, 15% was the appropriate rate.)

Hi PMM51,

You will need to ensure you have added the income - the section at the bottom of the page allows you do this.
We would not do it manually unless your return was selected for a review or if you contacted us to look at it.
If you wish us to look at if after it has been submitted, you will need to contact us via webchat as the phone line is closed until September.

Thank you.

Hi, I have a related query. For the first time I have received dividends from a US company (which is under £2k ) in 2022 2023 tax year. There was 15% witholding tax at source. I do not have any other dividend income in the 2022 2023 tax year. When I have entered this in the foreign income section of my self assessment (gross dividends, tax withheld amount and selected 15%) the self assessment is giving me a £0 credit for this. Please can you advise what I am doing incorrectly as I understood that I can get relief for this 15%? Thank you

Hi ZZAP, 

If your total UK and foreign dividends amount to less than the £2000 threshold, then there is no UK tax to pay on the dividends.
 No relief would be due for the USA tax paid, as there is no tax to pay in the UK, because there is no double taxation in place.  
Foreign tax credit relief is available when there is UK tax to pay on the dividends.  
No tax to pay equals no foreign tax credit.

Thank you.




 

Good Morning, I work for a UK charity. We receive dividend income from the USA. Could you please advise if we are eligible as a charity foundation to reclaim withholding tax back? How do we do this? Many thanks Regards, 

Hi,
The witholoding tax can only be given as a credit in respect of any UK tax that would be due on the income.
HMRC cannot refund any foreign tax deducted:
Tax on foreign income
Thank you

Following on to ZZAP's question: If the taxable dividend on US stock holdings is >£2,000 in 22/23, and I paid 30% US withholding tax, firstly, can I claim a foreign tax credit? And, secondly, can I apply the £2,000 allowance - thus claim back foreign tax credits? E.g. £3,000 of USD equivalent dividends, paid £900 in withholding tax (30%). £1,000 taxable dividends after £2,000 allowance. So my UK taxable amount would be £1,000 taxed at the relavent band. If taxed at the higher rate, 33.75%, the taxable amount = £337.50. And my foreign tax credit would be £562.50 (£900.00 - £337.50). Thank you in advance.

Hi Customer9999,
You will declare the dividends on the foreign section of the return and show the full amount - the dividend allowance is applied in the calculation. you can claim foreign tax credit relief for the tax paid but this is limited to 15%.
Thank you.

Hello HMRC Team, Many thanks for the helpful information in this thread and similar to the above, but to build up this discussion further:-- I hold US shares as part of an ESPP. The yearly dividend payable in to the employee share plan has been included as an amount on my payslip as taxable income and appears on the P60. The dividend amount is under £1000. Does this mean that as it has been included as a taxable amount but not hit the £2000 threshold, that it will need inclusion in the self assessment to deduct the tax that has been paid through the payroll? (I have no other dividend income) Thank you.

Hi Matthew Gray,
There are restricted stock units and not the same as dividends in order to qualify as part of the dividend allowance.
Please see:
ERSM20193 - Employment-related securities and options: what are securities: RSUs and dividend equivalents
Thank you. 

@Customer9999 - have you filed a W8-BEN? If you have then your US account provider should be only withholding 15%. 30% is the default rate if no W8-BEN has been filed which makes me suspect you haven't filed one.

Hello HMRC Team, I have foreign dividend income from US and there was 15% withholding. For our SA106, the 15% withholding amount shall be put in column C as foreign tax or put it in colmn D as witholding tax? Regards, 

Hi sluicw02,

It should bre put in column C.

Thank you.

Hello, I have around £12k (gross) of US dividends with withholding tax of 30% (c.3.5K£). I also have some dividends from France , 3.5£K gross, tax 0.4£K. When I run the tax calculation in HMRC self assessment I have a total of 47k of dividends of which 10k is taxed at the higher rate of 33.75%. I have tried to claim double taxation relief on all the foreign holdings at 15% as per the DTAs. However the automated tool only gives me 0.46£K relief. It makes little difference what order I claim relief in. This seems extremely low. Surely it should be 15% of gross foreign dividend income, ie around 2.2k relief?

Sorry please ignore last post I had an incorrect entry and after correcting I have now solved my problem