Veri

Thanks for your response. So, (assuming the partial refund from the Spanish tax authority is successful) that leaves the treaty amount of 10% Spanish dividend tax paid for Spanish shares, which I'll reflect in box 18. In fact, Box 18 will show something between 8.75% and 10% tax paid, as the majority of estate shares are British. When I do the final informal estate declaration, I'll credit 8.75% already paid, noting AIUI that I can only credit the lower of foreign tax actually paid (10%) and whatever the UK rate is (8.75%). It seems there is no way on the R185 to document this case - e.g. box 24 only covers FTCR that's claimable but unclaimed. My issue with this approach is as follows. Let's say for simplicity that all shares are Spanish, there is one beneficiary, their dividend allowance hasn't been used up, and they complete Self Assessment. After submitting SA107, they'll be given a refund assuming [A] the net amount in box 18 was with 8.75% taken off, when in fact [B] 10% was taken off of which 8.75% of the gross is refundable. These amounts are in fact slightly different, as I will now show. Let's say the net amount is £90. Then the gross amount in the former [A] case would have been £90/(1-0.0875)=£98.63, so there's a refund of £8.63. But in the latter [B] case, the gross amount was £90/(1-0.1)=£100, and 8.75% of this is £8.75. I am talking about a small difference (in HMRC's favour), but the fact that the calculation would come out slightly wrongly makes me worry that I'm filling something in wrongly. The only way that the calculation in the previous paragraph would happen correctly is if for "Box 18: dividend income - after tax taken off" I put the dividend income after ONLY hypothetical 8.75% UK tax is taken off, since that's the box that must be transposed to SA107, regardless of the "tax paid or tax credit on box 18 income" reflecting UK /and/ Spanish tax. But that's not an obvious interpretation, so it might be nonsense. Or I might be missing the point entirely, in which case please tell me.

I am administrating a family member's estate which includes a small amount of dividend income from Spanish shares. These have 19% withholding tax taken off dividend payments at source. Now, 9% can be reclaimed (in theory) from the Spanish tax agency, because 10% is the maximum rate that Spain is allowed (in the usual case) to charge to UK residents for dividends from Spanish companies according to the UK-Spain DTA. The UK charges 8.75% on dividend income on estates with no allownce. If this was a regular tax return, the gross dividends *before* withholding tax are reported as the gross dividend income, I'd claim 9% back from the Spanish tax agency, and as for the remaining 10%, since 10% > 8.75%, I'd have foreign tax credit relief of the lower of a. 10% b. whatever my current dividend tax rate is. But, for R185 (estate income) purposes, is the Box 18 "tax paid" i) the full 19% withholding tax actually paid, ii) the 10% maximum that Spain is allowed to charge, or iii) the 8.75% that the UK would charge on estate dividend income before considering any reliefs/reductions? The box is clear that it should include dividends from foreign companies. Option i seems to go against the rule that we should always obtain maximum foreign refunds before asking for anything from HMRC, leaving options ii or iii. Option ii answers the literal question of what "tax paid" remains, but I understand the net figure is used to automagically produce a credit once transferred to the appropriate boxes of SA107 (Trusts etc) by assuming that 8.75% dividend tax will have been paid by the estate, and this will end up being calculated wrongly. This leaves option iii. So, my preferred approach is to use option iii, which would assume that 8.75% tax has been paid. In my informal estate tax declaration to HMRC, I will deduct the maximum allowable credit (i.e. the 8.75% which would otherwise be due on foreign dividend income) for foreign tax already paid, means HMRC is effectively crediting the beneficiary for tax paid by the estate via the withholding system to Spain's agency. This accords with UK-Spain DTA rules. Does this seem reasonable please?