Wrangler

During the moderation delay, I believe I've found the answer buried on the Shareview/Santander website. According to this: [link removed] it's to be treated as a capital distribution. It seems that HL's tax certificate is misleading and/or incorrect. ATB

An estate in administration received foreign dividends in 2015/16 from a country with a 15% DTT limit: £75 net, £25 foreign tax deducted The executors settled tax for 2015/16 with HMRC using the FTCR option: £75 net, £8.33 FTC used to cover the 10% UK tax, leaving £6.67 claimable FTC, and £10.00 excluded. The administration period completed in 2021-22 by which time the 7.5% dividend tax had replaced the 10% tax credit. The beneficiary, an IIP trust, received a payment of £75 with a reduced tax credit of 7.5%, which 'excluded' £2.25 of foreign tax paid. Hence R185(Estate) v1 Box 18 Dividend income (UK & Foreign): £75 net Box 18 Tax paid on dividends: £6.08 Box 24 Unclaimed FTCR element of foreign tax: £6.67 The IIP Trust needs to pay the dividend to its tenant in 2022-23, when the dividend tax is 8.75%. In this scenario, the beneficiary this breakdown: R185(Trust) v1: Box 7 Foreign income: Gross amount: 87.75 ( = £75.00 + £6.08 + £6.67 ) Foreign tax paid: £6.67 UK tax paid: £6.08 I can see an argument, however, that since the 10% tax paid in 2015/16 was a real payment of foreign tax rather than a 'notional' UK credit the £2.25 excluded from the R185(Estate) statement should have been added to the unclaimed FTCR. In this case, we'd have: R185(Estate) v2: Box 18 Dividend income (UK & Foreign): £75 net Box 18 Tax paid on dividends: £6.08 Box 24 Unclaimed FTCR element of foreign tax: £8.92 R185(Trust) v2: Box 7 Foreign income: Gross amount: 90.00 ( = £75.00 + £6.08 + £8.92 ) Foreign tax paid: £8.92 UK tax paid: £6.08 So my question is, which of these approaches is correct? (Or maybe they are both wrong?) TIA

Hi I'm hoping for help understanding the nature (capital vs income) of the Santander dividend paid on on 04/05/2021. According to the Santander website, this was "...paid under the resolution for the distribution of share premium approved at the Bank’s general shareholders meeting on 27 October 2020”. To settle an estate in the UK, I need to know whether this dividend should be reported as a ‘capital’ or ‘income’ distribution to HMRC and the beneficiaries. On one hand: (a) The usual Spanish 19% withholding tax was not deducted, which suggests to me it’s capital. (b) It's apparently paid from the 'share premium' reserve also says 'capital' to me. On the other hand: (c) Hargreaves Lansdown have listed the payment as 'foreign income' on their annual tax certificate report and (d) I believe that, if Santander were a UK company, such a dividend would be treated by HMRC dividend income. 3 hours phoning HMRC got me nowhere. Can anyone hear help, please? TIA