SA - Foreign Tax Credit Relief (FTCR) on US Dividends - 8.75% for basic rate tax payer?

I tried to enter my US Dividends into the 23/24 on line self assessment form yesterday. As a basic rate tax payer I think that I am entitled to 8.75% of the 15% tax I have paid on the dividends in US (W-8BEN form completed). However I was not able to select 8.75% in the drop down box in the form. 7.5% is there and 8% is there but not 8.75%. Am I wrong in the % relief I should be claiming? If not should the on line form not include 8.75% in the drop down box?

Hi AndyR195,

You are entitled to tax relief of 15% on your USA dividends.  
You should select 15% in the dropdown for the box marked "rate of tax credit relief allowed"
The foreign tax credit relief can be restricted to 15% of the USA tax paid.

Thank you. 


 

Hi HMRC, Refer to the above situation, I am entitled to tax relief of 15% on your USA dividends. I have £2,500 (Pre Tax) USA Dividends. There is 30% withholding tax in USA, so I got £1,750 in my account. If I claim Foreign Tax Credit Relief(FTCR), I try to fill in the SA106 as below. 1. Page F1, box 2: input 375. (=£2,500 x 15%) 2. Page F2, 'Dividends from foreign companies', -Column A: input USA -Column B: input 2,500 -Column C: input 750 (=2500 x 30%) -Column E: input X -Column F: input 2,500 Please correct me if I am wrong. Thanks.

Hi derek_er Chan
That is correct.
Once the calculation is done, the credit will then be limited to the maximum relief allowable in the UK .
Thankyou.

I refer to the post by AndyR195 above and the response to it. I have US dividends on which I have paid 15% US tax. I selected 15% from the drop down menu which prompted an error message "WARNING: Please check and amend the entry below". Also the response states "The foreign tax credit relief can be restricted to 15% of the USA tax paid". Tax paid was 15% so 15% of 15% is 2..25%. That can't be correct surely? Help!

Hi John44

It will just be an advisory message to ensure you have selected the correct rate. the 15% applies to the gross dividend paid out spo that the tax figure doesnt exeed the limit.

Thank you