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Posted Fri, 14 Oct 2022 11:56:59 GMT by cyfaa
My foreign incomes come from stock dividends and bond interests. Part of these incomes is leveraged from the brokage account to purchase which incurring investment interest expenses. An investment interest expense is any amount of interest that is paid on loan proceeds used to purchase investments or securities. So, am I eligible to claim the tax deductions of these expenses for the incomes from dividends and interests?
Posted Tue, 18 Oct 2022 10:51:23 GMT by HMRC Admin 17

Hi,
 
The interest paid on a loan used to purchase shares may qualify for relief. 

SAIM10020 gives details of genral conditions and SAIM10080 gives guidance on how to calculate relief.

Thank you.
Posted Tue, 18 Oct 2022 23:58:31 GMT by cyfaa
Thanks for your reply. It’s really useful! As I have to report the foreign income on SA106 form, may I know these interest paid can be directly deducted from the total amount of income (in pounds) for both interests and dividends or is there another separate field to claim the relief in the form?
Posted Mon, 24 Oct 2022 12:56:36 GMT by HMRC Admin 17

Hi,

 
You should be able to claim foreign tax credit relief for dividends. 

You will need to review the double taxation agreement the UK has with the country where the dividends arise,
as the amount of relief can vary from country to country.

Thank you.
Posted Tue, 25 Oct 2022 23:54:46 GMT by cyfaa
Thanks for your reply. Claiming foreign tax credit relief for dividend should be related to withholding tax (WHT) of dividend received from securities in other countries. However, my question is asking how to claim the tax relief for the interest paid on a loan used to purchase shares? Can these interest paid be directly deducted from the total amount of income (in pounds) for both interests and dividends or is there another separate field in SA106 from to claim the relief?
Posted Fri, 11 Nov 2022 12:51:41 GMT by HMRC Admin 32
Hi,

You cannot set interest paid on a loan to buy shares against dividend income.    

Tax on dividends

Thank you.
Posted Sat, 17 Dec 2022 19:47:26 GMT by cyfaa
Thanks for your reply. After further study, I found that there is an item 'Qualifying loan interest payable in the year' in the section of 'Other tax reliefs' from the form of 'Additional information - SA101' which may match the purpose of claiming the tax relief for the interest paid on a loan to purchase shares (leveraging) Below is the link of detail description for an item 'Qualifying loan interest payable in the year' https://www.gov.uk/government/publications/interest-and-alternative-finance-payments-eligible-for-relief-on-qualifying-loans-and-alternative-finance-arrangements-hs340-self-assessment-helpshee/hs340-interest-and-alternative-finance-payments-eligible-for-relief-on-qualifying-loans-and-alternative-finance-arrangements-2021 So, am I eligible to claim the tax relief on this item?
Posted Wed, 21 Dec 2022 11:13:16 GMT by HMRC Admin 32
Hi,

From the limited information held, this relief doesnt apply to you as you have not invested in the company per the conditions set out. This is you buying shares on the stock market and is not a qualifying condition. 

Thank you.
Posted Wed, 21 Dec 2022 15:32:23 GMT by cyfaa
Thanks for your reply. In short, can I conclude that the interest paid on a loan used to purchase shares can’t be qualified for any tax relief?
Posted Thu, 22 Dec 2022 12:38:19 GMT by HMRC Admin 32
Hi,

Yes, that is correct.

Thank you.

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