Dividend Income from UK shares (tax)

[Lazy Sod]

I'm a Brit who is resident in Thailand for tax purposes,.

I have dividend income from shares in a UK stockbroker account.

Do I have to pay UK income tax on these dividends? If so does anybody know the applicable personal allowance?

Some people say no (because I am not resident in the UK), some people say yes (because this is UK income and it doesn't matter that I am non UK resident). So much conflicting information for expats with UK income these days.

[KittenKong]

If you are not a UK resident then, by concession, your tax liability on dividends and interest is limited to that deducted at source. However, at the same time you also forfeit your personal allowance.

What that means in practice is that if your UK income is exclusively dividends and interest and such-like then you have nothing extra to pay in the UK. But if you have other taxable income (rent, pensions, whatever) then you may be liable to tax on that without having the benefit of the personal allowance.

So if you are in that second category you need to do your sums carefully.

 

[myprivate]

I used to think the same until I read this...https://www.gov.uk/tax-on-dividends

 

[KittenKong]

34 minutes ago, myprivate said:

I used to think the same until I read this...https://www.gov.uk/tax-on-dividends

I'm not aware that the concession for non-residents has changed. In fact I received my zero notice for my 2017/2018 return just recently.

[myprivate]

Interesting... thanks

[topt]

12 hours ago, Lazy Sod said:

Do I have to pay UK income tax on these dividends? If so does anybody know the applicable personal allowance?

Depending on your circumstances as @KittenKong said in the first reply -

https://www.gov.uk/income-tax-rates will give you the allowances if you go that route.

[jkthai]

Everyone seems to say that unless you remit your dividends in the same year as they were earned you wont be liable for Thai tax

 

apologies , just reread the post , UK tax ,

Edited November 23, 2018 by jkthai
wrong read

[wordchild]

To the OP,  it’s as KittenKong said above, you have a choice.

You can make use of your personal allowance to offset other tax liabilities that you may have (in the U.K.).

  However, if you do that , any dividend income that you have will come into  consideration, and you will be taxed on that as per U.K. dividend tax rates.

Or , you can simply not make any claim against your U.K. personal allowance. If you do that , then your dividend income (and certain other income) will be considered as not relevant for U.K. tax purposes and you will not be subject to any tax on that income.

what is right for you depends on your personal circumstances.

[Lazy Sod]

Done some more research. . .

 

Dividend Allowance is GBP5,000

Personal Allowance is GBP11,850

Total = GBP16,850

 

I have no other UK income and am definitely non-resident. So it seems that if total dividend income is less than GBP16,850, and I have no other UK income, then no tax is payable. Correct?

 

[KittenKong]

2 minutes ago, Lazy Sod said:

I have no other UK income and am definitely non-resident. So it seems that if total dividend income is less than GBP16,850, and I have no other UK income, then no tax is payable. Correct?

Those allowances do not apply to non-residents who do not use their personal allowance, as I explained above. All dividend income is exempt for non-residents who dont have other UK taxable income. There are no limits to this, as Philip Green probably knows.

That said, on the conditions you mention, you will indeed have no UK liability.

[rak sa_ngop]

On 11/21/2018 at 2:14 PM, KittenKong said:

If you are not a UK resident then, by concession, your tax liability on dividends and interest is limited to that deducted at source. However, at the same time you also forfeit your personal allowance.

What that means in practice is that if your UK income is exclusively dividends and interest and such-like then you have nothing extra to pay in the UK. But if you have other taxable income (rent, pensions, whatever) then you may be liable to tax on that without having the benefit of the personal allowance.

So if you are in that second category you need to do your sums carefully.

 

I believe that what you are describing is called in UK Govt speak 'disregarded income'. As far as I understand a State pension would be excluded from the calculation of UK income in this instance whereas a private pension is included.

 

Please correct me if I am wrong.

[KittenKong]

6 hours ago, rak sa_ngop said:

I believe that what you are describing is called in UK Govt speak 'disregarded income'. As far as I understand a State pension would be excluded from the calculation of UK income in this instance whereas a private pension is included.

 

Please correct me if I am wrong.

You may well be right. As I am not yet old enough to receive the state pension I've not had any reason to look at it very closely. That day may yet come!

I do know that this exemption used to be called a concession and goes back a long way. It may be that it now goes by another name.

The end result seems to be the same though, and it is important for each individual to carefully check how the rules apply to him and his income especially when it comes to any income other than dividends and interest. I hope that I have pointed this out sufficiently.

[wordchild]

7 hours ago, Lazy Sod said:

Done some more research. . .

 

Dividend Allowance is GBP5,000

Personal Allowance is GBP11,850

Total = GBP16,850

 

I have no other UK income and am definitely non-resident. So it seems that if total dividend income is less than GBP16,850, and I have no other UK income, then no tax is payable. Correct?

 

KittenKong has made it easy for you "Lazy Sod" (sic) , simply read his post below yours (carefully) .

On the basis of what you said, you would indeed have no (UK) tax liability, but NOT for the reasons you state; personal allowance, dividend allowance, have no relevance if your situation is as you describe.

You have no need to make any use of your UK personal allowance therefore you should opt to have your dividend income "disregarded' for UK tax purposes. There is no limit to the amount of (dividend) income that you can earn UK tax free if you elect NOT to make use of the UK personal allowance (God bless UK tax law!)  

[wordchild]

Disregarded income is a necessary part of UK tax law because of the need to accommodate ( and treat fairly)  non UK entities (and people) who own UK shares and derive dividend income from them. Also, without this concession, the cost of capital for UK plc would be higher; non resident UK citizens can effectively opt to be treated in the same way as a foreign based ,non UK citizen, who happens to own UK shares.

But, the balancing factor is that you must not make use of any UK personal allowance to benefit from the concession.

Edited November 30, 2018 by wordchild

[KittenKong]

18 hours ago, rak sa_ngop said:

Please correct me if I am wrong.

Looks like you are right:

 

‘Disregarded income’ includes:

• interest and alternative finance receipts from banks and building societies
• dividends from UK companies
• income from unit trusts
• income from National Savings and Investments
• profits from public revenue dividends
• profits or gains from transactions in deposits
• certain social security benefits, such as State pensions or widows’ pensions
• taxable income from purchased life annuities except annuities under personal pension schemes

 

https://www.gov.uk/government/publications/non-residents-and-investment-income-hs300-self-assessment-helpsheet/hs300-non-residents-and-investment-income-2015

 

Good news, if I can live long enough to claim mine!

 

Whilst the income is known as disregarded income, it seems that the exemption is still called a concession. So both descriptions are apparently valid.

[rak sa_ngop]

I just had an interesting telephone conversation with the UK 'Taxman'. I was questioning why my personal allowance had not been taken into account on my recent Self Assessment Tax Calculation. I was told that the computer program for calculating expat tax returns will use both options, i.e. with or without the personal allowance. In my case both results were presented and the the most financially beneficial to the Taxpayer was the final amount required.

 

I had incorrectly calculated how much tax I would be liable from income derived from the encashment of a SIPP investment and therefore thought that I should claim my personal allowance. Turns out that it was better for me not to accept the personal allowance and hence receive a tax rebate.

 

So it seems that it is not strictly necessary to claim for disregarded income, the friendly Taxman (and he was friendly) will do the calculations for you and present you with the best result.

[KittenKong]

3 hours ago, rak sa_ngop said:

So it seems that it is not strictly necessary to claim for disregarded income, the friendly Taxman (and he was friendly) will do the calculations for you and present you with the best result.

Yes. I have never claimed or opted for it. I just declare all my income in the correct boxes, and complete the extra residency page (so annoying that it is the only page that you cant do online), and they have always applied the exemption automatically.

[wordchild]

On 12/1/2018 at 8:41 AM, rak sa_ngop said:

I just had an interesting telephone conversation with the UK 'Taxman'. I was questioning why my personal allowance had not been taken into account on my recent Self Assessment Tax Calculation. I was told that the computer program for calculating expat tax returns will use both options, i.e. with or without the personal allowance. In my case both results were presented and the the most financially beneficial to the Taxpayer was the final amount required.

 

I had incorrectly calculated how much tax I would be liable from income derived from the encashment of a SIPP investment and therefore thought that I should claim my personal allowance. Turns out that it was better for me not to accept the personal allowance and hence receive a tax rebate.

 

So it seems that it is not strictly necessary to claim for disregarded income, the friendly Taxman (and he was friendly) will do the calculations for you and present you with the best result.

You are spot on, you dont need to claim it (as such), apologies if my post above implied that you did. IF you fill in a tax  declaration (and not all expats need to do this) then the correct tax calculation from the revenue is the one that is to your advantage; ie use of personal allowance OR to have certain income disregarded.

Edited December 2, 2018 by wordchild

[Lazy Sod]

Many thanks to all who contributed, it's clear to me now that in my case I have no tax liability on this dividend income.

One last question, do I still have to file a tax return?

[wordchild]

10 hours ago, Lazy Sod said:

Many thanks to all who contributed, it's clear to me now that in my case I have no tax liability on this dividend income.

One last question, do I still have to file a tax return?

Short answer is yes you do: if  , after a period of time ,as an expat, you demonstrate that your income is of limited interest to HMRC then it’s possible that you could ask for , and get,  an exemption from this requirement.