Foreign interest and dividends

Hello Admins, I hope you can advise on the below issue. I am a UK tax resident, domiciled in the UK. I have recently received a letter saying that HMRC’s information indicates I currently have (or previously had) offshore income or gains and if I have additional tax to pay, to tell HMRC using the Worldwide Disclosure Facility. This letter prompted me to realise that the investment advisor that manages my investment portfolio has matured overseas interests and overseas dividends on some of my investments. This has become clear after enquiring with them and requesting further information. Regretfully, I have been unaware of this until I received the HMRC, and I hope I can rectify retrospectively my position for the amounts received each tax year (from 2016 until the current financial year). The amount of overseas interest does never exceed £470 each year and the amounts of dividend is below 125£ each year. Based on this information, can you help me determine whether I have underpaid tax? If so, I would like to take steps to correct it. Am I able to submit my self-assessment tax returns retrospectively for the previous years? I have never submitted self-assessment returns before, as my employment circumstances did not require it. Is there anything else that I should do? Thank you.

Hi, 

You will need to reply to the letter that you received with the information of the income received each year as charges may be due for non disclosure.

Thank you.

Hi HMRC! I own some Vanguard VGOV shares (Vanguard UK Gilt UCITS ETF –ISIN IE00B42WWV65) which are 100% UK gilt/bonds. My understanding is that the distributions should be treated as interest, not dividends, because they are 100% bonds. However, I have just received a Consolidated Tax Statement (CTC) from HSBC where they put all my distributions under dividends, with nothing under interests. I can’t currently get any answer from HSBC, but I don’t want to make a mistake on my tax return. I will keep chasing HSBC for an answer, but it would help if you could confirm how Vanguard VGOV distributions should be treated: Dividends or interests? Furthermore, as Vanguard is domiciled in Ireland, my understanding is that the distributions should be treated as foreign interest (although they are made of UK bonds). For information, my total foreign dividends and interests are more than £2000. Is this correct? Thank you.
 

The gross interest from an IRA withdrawal is to be reported as foreign interest on a self assessment. Is the gross interest defined as the difference between the sale price of funds sold and the cost basis as recorded by the financial institution holding the IRA account.

Dear sir/madam, I am writing to enquire if it is necessary to get a UTR regarding foreign bank interest in a sum of approx. £1.5 (converted from Hong Kong dollars). My case is my sister has already retired and she doesn’t have any other income (no from any properties, no from trust, annual income is 0 and not a company director) but only the above mentioned amount £1.5, I read the guide from the HMRC, it seems that if foreign income less than £300 per year is not necessary to get an UTR for forwarding Tax Return. It would be much appreciated if you could advise me and my sister on this. Thank you very much indeed. Mabel

Hi TipTopKaf,

These are normally taxed as interest and you will therefore need to contact HSBC for clarification as to why they have shown as dividends.

Thank you.

QUESTION ON DIVIDEND FROM FOREIGN COMPANIES Hi HMRC Admin, I got some dividend from US listed ETFs. I bought those US listed ETFs from a Hong Kong bank. Q1. When I fill the respective country code in column A of SA106, shall I fill in USA instead of HKG? Q2. 30% of tax is taken off before giving me the remaining 70% dividend. So shall I put 30% tax in column C "Foreign Tax taken off and paid"? Thanks and regards, Ki Chan

Hi Mabel F,

Please refer to guidance at Tax on foreign income.

Thank you.
 

Hi,

Yes, you would show USA and the tax deducted in column C.

Thank you.

Hi HMRC admin, I hoe you are well. I would like to clarify if I need to fill the Foreign page (SA106) for the bond interest (US$800) received in non-UK bank. According to the Tax Return notes Page TRG 3, the Foreign pages would be used when the interest is over £2,000. So SA106 isn't appliable for my case, am I right? In the Tax Return notes Page TRG 5, under the UK interest subtitle, it states that "Do not include interest from UK government securities (gilts), or interest from bonds ... These go in the ‘Additional information’ pages." Therefore I should fill in the non-UK bonds interest received in additonal information TRG7 instead of TRG 3. Am I right? Thank you for your attention. Best regards, Timothy

Hi tkyt,

If your interest is below £2000.00 and you are not claiming a foreign tax credit, you can enter the figure in box 3 and in box 7 show the name of the country the interest arose in box 7.

Thank you.

I have a question about the time period I should be considering when inputting the "Foreign tax taken off or paid" in box C. I have USA-sourced interest and dividend income. I know that I'm supposed to report the USA-sourced income that I earned during the UK tax year 2022-23 (April 6, 2022 to April 5, 2023), but is it the same for the tax I paid? Or, do I consider the "Foreign tax taken off or paid" in the USA tax year (January 1, 2022 to December 31, 2022)?

Hi,
 

You can use the info based on the US year to inout your UK figures so that they match . Thank you.

Hi admin, Thanks for the reply. Can you please clarify what you mean by "so that they match"? The thing that confuses me is that the US and UK tax years DON'T match. I'd like to provide a specific example to ensure I do it correctly. Let's say that for the UK tax year 2022-23 I had £1,000 in US-sourced savings interest income, and I paid 20% tax on that, or £200. Let's say that I also had US-sourced savings interest income of £500, taxed at 20% (so £100 paid in tax) between January 1, 2022 and April 5, 2022; that is, inside the US 2022 tax year, but outside the UK 2022-23 tax year. When I fill in my UK tax form, in column B I'll put £1,000, but in column C would I put £200, or £300 (£200 + £100)? If it's the latter, then would I also include in column C tax payments made in 2022 that were for income earned BEFORE 2022? In 2022 I happened to have paid some taxes for previous years' income. Thanks!

Hi,

Interest arising in the UK is declared on the tax return as from 6 April 22 to 5 April 23 in the 2022 to 2023 UK tax return. Overseas interest arising in the tax year of that country, for example, 1 January 22 to 31 December 22 of say £500, is declared as foreign interest in the 2022 to 2023 UK tax return as £500.

Thank you.

Oh, the US interest income earned that I report is also supposed to be from the US tax year, not the UK tax year?

Hi,

You would simply transpose the income from a US tax year, 1 January 2022 to 31 December 2022, into the UK tax year, 6 April 2022 to 5 April 2023. You do not need to apportion to try and match the UK tax year. For example, if you earned £10000 of interest in a US tax year, you would declare £10000 interest is a UK tax year.

Thank you.

Hi HMRC admin, if I have received bank interest in 100 US dollars from Revolut's US dollar saving account . Revolut is authorised under the UK Electronic Money Regulations , can I report the bank interest by filling in box 2 (untaxed UK interest ) ? Thank you for reading

Hi Eva,
Yes you can if no foreign tax has been deducted on it.
Thank you. 
 

Hi, I have never filed a tax return because all my interest, dividends and capital gains were below the threshold where I needed to pay tax. However, I have now received the "your overseas assets, income or gains" letter and now I am wondering if I should have filed a tax return. My assumption that I did not was based on the fact that I thought "untaxed foreign income" in the application for a self-assessment tax return meant only income beyond personal allowances. However, I am now not sure if this is true for interest, even below the personal allowance for interest (1000 GBP in my case as a basic rate taxpayer). Would you be able to clarify if it is always necessary to file a self assessment tax return when there is interest in a foreign bank account, even if this is below my personal allowance? Thank you!